Use the Information Below to Answer the Following Questions:
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question 20

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 2011?

• A) $2 000 000
• B) $3,200 000
• C) $6 000 000
• D) $7 000 000.

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Definitions:

Marginal Tax Rate

A rephrasing: The portion of tax applied to your income for each additional dollar you earn.

Required Rate of Return

The minimum annual percentage return an investor expects to earn from an investment, considering its risk level.

Preferred Shares

A type of stock that provides holders with a fixed dividend, which must be paid before dividends are paid to ordinary shareholders.

Floatation Costs

The costs that a company incurs when it issues new securities, including underwriting fees, legal fees, and registration fees.