GlenGary Investment Corporation Is Analyzing a Proposal to Build Condo

question 180

Multiple Choice

GlenGary Investment Corporation is analyzing a proposal to build condo units in southern Florida. The project will require an initial investment of $300,000. The building has a useful life of 25 years, a residual value of $100,000, and is depreciated on a straight-line basis. GlenGary uses the accounting rate of return model to evaluate investment projects. What is the minimum annual operating income that must be generated by this project to achieve the 9% accounting return required by GlenGary?

• A)$9000
• B)$27,000
• C)$12,000
• D)$18,000

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Definitions:

Consumption Patterns

The typical ways in which individuals or groups use, consume, or dispose of goods and services.

Process Innovations

Improvements or significant changes to the methods or procedures in manufacturing, business operations, or services that increase efficiency, productivity, or overall performance.

Adaptive Tools

Instruments or technologies designed to adjust to changing conditions or requirements, often enhancing efficiency or effectiveness.

Relative Qualities

The characteristics or attributes of a product or service compared to those of competitors within the market.