Use the Following Information for Questions 96-98

question 22

Multiple Choice

Use the following information for questions 96-98.
During 2014, Vaughn Corporation sold merchandise costing $2,250,000 on an installment basis for $3,000,000. The cash receipts related to these sales were collected as follows: 2014, $1,200,000; 2015, $1,050,000; 2016, $750,000.
-What is the rate of gross profit on the installment sales made by Vaughn Corporation during 2014?

• A) 75%
• B) 60%
• C) 40%
• D) 25%

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Definitions:

Payback Period

The length of time required to recover the cost of an investment.

Cash Inflows

Cash inflows refer to the money received by a business from various sources, including sales revenues, investment income, and financing.

IRR

The Internal Rate of Return, a financial metric used to estimate the profitability of investments by calculating the interest rate at which the net present value of all cash flows (both positive and negative) from a project equal zero.

Investment

Allocating resources, usually money, with the expectation of generating an income or profit.