Use the Information Below to Answer the Following Questions:
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question 41

Multiple Choice

Use the information below to answer the following questions:
On 1 January 2010, Romulus Ltd signed a contract worth $21 000 000 to construct a light rail from here to there. The light rail was to be built over 3 years, with progress payments of $7 000 000 to be made at the end of each year. Estimated costs were $15 000 000 and the following costs incurred and paid by Romulus Ltd were in accordance with estimates and represented the percentage completed in each year:
$\begin{array}{llcc} & \text {\$ } \\ \text {2010 } &\$ 8000000 \\ \text { 2011 } &\$ 5000000 \\ \text { 2012} &\$ 2000000 \\ \text { } &\\ \text { } &\\\end{array}$

The project was completed in December 2012.
-Using the percentage of completion method,what profit would Romulus Ltd report in 2010?

• A) $800 000
• B) $2 000 000
• C) $3 200 000
• D) $1 300 000.

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Definitions:

Abnormal Returns

Abnormal returns refer to the profits generated from a security or portfolio that differ significantly from the expected market returns, based on risk and market performance.

Positive Abnormal Returns

Returns on an asset or portfolio that exceed the benchmark or expected return given its risk level.

Vanguard Index 500

A mutual fund that aims to mirror the performance of the S&P 500, managed by Vanguard.

Passive Investment

An investment strategy involving minimal buying and selling, aiming to benefit from long-term market returns with low fees.