A Company Is Looking to See What Rate of Return

question 1

Multiple Choice

A company is looking to see what rate of return it is receiving from a project when the project's initial investment is $14 million today and will receive $18.5 million in four years.

• A)7.22 per cent
• B)32.14 per cent
• C)19.8 per cent
• D)6.2 per cent

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Definitions:

Book Value

The net value of an asset calculated as the original cost minus depreciation, amortization, or impairment costs.

Cash Dividends

Payments made by a company out of its profits to its shareholders, typically in the form of cash.

Preferred Shares

A class of ownership in a corporation that has a higher claim on assets and earnings than common shares, usually with fixed dividends.

Incorporation Date

The specific date on which a legal entity was legally created or incorporated, officially beginning its existence as a corporate body.