The Profit Margin for Central Division Is 20% and the Investment

question 87

Multiple Choice

The profit margin for Central Division is 20% and the investment turnover is 2.8.What is the rate of return on investment for Central Division?

• A) 20%
• B) 7.1%
• C) 14%
• D) 56%

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Definitions:

Discount Rate

Used in discounted cash flow analysis, this rate aids in calculating the present worth of cash flows anticipated in the future.

Cash Flows

The aggregate of all monetary exchanges into and out of a business endeavor, directly affecting its operational cash levels.

Discount Rate

The interest rate used in discounted cash flow forecasts to decipher the present value of prospective cash flows.

Present Value

Today’s fiscal equivalent of money anticipated in the future or sequences of cash inflows, discounted using a specified rate of return.