Reinhold Corporation Has a $3,500,000 Investment in Equipment and Is

question 52

Multiple Choice

Reinhold Corporation has a $3,500,000 investment in equipment and is subject to a 20% income tax rate. Cash inflows are expected to average $320,000 before tax over the next few years; in contrast, average income before tax is anticipated to be $220,000. The company's accounting rate of return is:

• A)5.00%.
• B)6.30%.
• C)7.30%.
• D)9.10%
• E)55%.

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Definitions:

Stock Prices

The current price at which a share of a company is bought or sold in the market.

Stock Price Performance

An assessment of how the price of a specific stock or the overall stock market has performed over a given period.

Industry

A category of companies that produce or supply similar products, services, or sources of income.

Demand Shock

A sudden event that increases or decreases demand for goods or services, affecting the price and production levels.