The Expected Average Rate of Return for a Proposed Investment

question 4

Multiple Choice

The expected average rate of return for a proposed investment of $800,000 in a fixed asset with a useful life of 4 years,straight-line depreciation,no residual value,and an expected total net income of $360,000 for the 4 years,is

• A) 45%
• B) 22.5%
• C) 11.3%
• D) 5.5%

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Definitions:

Easy Money

A monetary policy stance characterized by low interest rates and high availability of credit to encourage economic growth.

Exports

Products or services made in one country and purchased by consumers in a different country, adding to the exporting nation's overall economic output.

Interest Rates

The cost of borrowing money or the return for investing money, usually expressed as a percentage of the principal per period of time.

Tight Money Policy

A monetary policy strategy used by central banks to reduce the money supply and increase interest rates to control inflation.