The Expected Average Rate of Return for a Proposed Investment

question 129

Multiple Choice

The expected average rate of return for a proposed investment of $4,800,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $10,560,000 over the 20 years is

• A) 24%
• B) 22%
• C) 45%
• D) 10%

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Definitions:

Capital Requirements

The minimum amount of financial resources that a company needs to maintain its operations and meet regulatory obligations.

Fragmented Competition

describes a market structure where no single firm dominates the market, and many small companies compete for market share.

Opportunity Recognition

The process of identifying and evaluating potential business or investment opportunities.

Cross-Association

The relationship or connection between different ideas, concepts, or entities that can lead to innovative solutions or insights.