A New Coffee Roasting Machine Bought by a Cafe Costs

question 22

Multiple Choice

A new coffee roasting machine bought by a cafe costs $10 ,000. If it saves the cafe $1,000 a year, its average rate of return is ________.

• A) 10 percent
• B) 100 percent
• C) 50 percent
• D) 0 percent

Determine the present value of annuities and single cash flows.

Understand and calculate the effective annual rate (EAR) with different compounding frequencies including continuous compounding.

Analyze and calculate payments for saving plans and retirement funds.

Understand the concept of dividends and calculate returns on stocks.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.

Premium

An amount paid in addition to the standard or original price, often for insurance, bonds, or faster service.

Shares Of Common Stock

Units of ownership in a corporation, providing shareholders with a proportion of the company's profits and voting rights.