A Firm Has an Average Investment of $10,000 During the Year.During

question 16

Multiple Choice

A firm has an average investment of $10,000 during the year.During the same period,the firm generates after-tax income of $1,000.
If the cost of capital is 15%,what is the net return on the investment?

• A)15%
• B)-5%
• C)10%
• D)5%

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Definitions:

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.

Quality Of Income Ratio

The quality of income ratio measures the proportion of income that has been realized in cash or is easily convertible into cash, indicating the company's earnings sustainability.

Cash Payment

A payment made in currency notes or coins as opposed to checks or electronic transfers.

Cash Dividend

This form of profit distribution by companies involves transferring cash to shareholders, typically determined by the board of directors.