Shields Company Has Gathered the Following Data on a Proposed

question 142

Multiple Choice

Shields Company has gathered the following data on a proposed investment project:
$\begin{array}{|l|r|}\hline \text { Investment Required in Equipment } & \$ 400,000 \\\hline \text { Annual Cash Inflows } & \$ 80,000 \\\hline \text { Salvage Value } & \$-0- \\\hline \text { Life of the Investment } & 10 \text { years } \\\hline \text { Discount Rate } & 10 \% \\\hline\end{array}$
(Ignore income taxes in this problem.)
-The simple rate of return on the investment is closest to which of the following?

• A) 5%.
• B) 10%.
• C) 15%.
• D) 20%.

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Definitions:

Supply-Side

Refers to economic policies or theories focusing on boosting production and supply as the key to stimulating economic growth, as opposed to demand-side measures.

Generic Competition

Occurs when products or services that are similar but not branded compete in the market.

Product Type

Refers to the classification of a product based on its characteristics, purpose, and the needs it fulfills in the market.

Cross-Elasticity Data

Information that measures how the quantity demanded of one good changes in response to a price change of another good.