Craycraft Incorporated Reported the Following Results from Last Year's Operations

question 204

Essay

Craycraft Incorporated reported the following results from last year's operations:
At the beginning of this year, the company has a $800,000 investment opportunity with the following characteristics:
Required:
1. What was last year's margin? (Round to the nearest 0.1%.)
2. What was last year's turnover? (Round to the nearest 0.01.)
3. What was last year's return on investment (ROI)? (Round to the nearest 0.1%.)
4. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall margin this year? (Round to the nearest 0.1%.)
5. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall turnover this year? (Round to the nearest 0.01.)
6. If the company pursues the investment opportunity and otherwise performs the same as last year, what will be the overall return on investment will this year? (Round to the nearest 0.1%.)

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Definitions:

Compounded Semi-annually

The process of applying interest to both the principal amount and any accumulated interest every six months.

RRSP

A Registered Retirement Savings Plan, which is a retirement savings and investing vehicle for employees and the self-employed in Canada, offering tax benefits.

Maturity Value

The amount of money an investment will grow to over a period of time at a specified interest rate.

Interest Rate

The percentage of a loan that is added on as interest for the borrower, usually stated as an annual rate.