If a $1 Million Project Can Be Financed at 12

question 12

Multiple Choice

If a $1 million project can be financed at 12 percent per year and will have a 15 percent rate of return per year,its annual profit will be

• A) $30,000.
• B) $120,000.
• C) $150,000.
• D) $240,000.
• E) $850,000.

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Definitions:

Shareholders

Individuals or entities that own one or more shares of stock in a public or private corporation, giving them partial ownership of the company.

Dividends

Payments made by a corporation to its shareholder members, usually in the form of cash or stock, representing a share of the corporate profits.

Retained Earnings Account

An equity account on the balance sheet that represents the accumulated net income of a company that has not been distributed to shareholders as dividends.

Net Income

The amount of profit remaining after all expenses, taxes, and costs have been subtracted from total revenue.