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

question 129

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 uses 15% as a minimum rate of return, how much residual income will result from this project?

• A) $16,000 per year
• B) $12,000 per year
• C) $4,000 per year
• D) $0 per year

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