Frank Company, Which Has Total Assets of $300,000, Has an Opportunity

question 49

Multiple Choice

Frank Company, which has total assets of $300,000, has an opportunity to invest $80,000 in a new project that will generate a return of $16,000 per year. Given this information, if Frank Company was earning 25% before, then accepts this project, its new return on investment will be approximately:

• A) 20%
• B) 22%
• C) 24%
• D) 26%

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Definitions:

Public School

An educational institution funded and operated by the government, providing free education to students.

Net Taxes

The difference between total taxes collected by the government and the total transfer payments and non-tax revenues it provides.

Transfer Payments

Payments made by governments to individuals without the expectation of any goods or services in return, such as welfare or social security payments.

Income Tax Rates

The percentage of one's income that is paid to the government as tax, which can vary based on income level and other factors.