A Company Projects an Increase in Net Income of $135,000

question 11

Multiple Choice

A company projects an increase in net income of $135,000 each year for the next five years if it invests $900,000 in new equipment. The equipment has a five-year life and an estimated salvage value of $300,000. What is the annual rate of return on this investment?

• A) 15.0%
• B) 22.5%
• C) 30.0%
• D) 34.5%

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Definitions:

Existing Product

A product that is currently available in the market or has been previously introduced, as opposed to a new or upcoming product.

Frequency

A measure of how often the target market has been exposed to a promotional message during a specific time period.

Target Market

A specific group of consumers identified as the recipients of a particular marketing campaign or message, based on shared characteristics.

Graphic Display

The visual presentation of information and data through diagrams, charts, maps, and other graphical elements to facilitate understanding.