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Williams Company is evaluating a new project. The project will cost $300,000 and have a 10-year life. Annual revenues will be $200,000 and annual operating expenses, including amortization, will be $188,000. The terminal value is $20,000, and the company requires a 16% rate of return. Ignore income taxes.
Compute the accrual accounting rate of return.
Capital Account
An account on a company's balance sheet that represents the equity or ownership interests of shareholders, including paid-in capital and retained earnings.
Partnership Interest
Partnership interest is an ownership share in a partnership that entitles the holder to a portion of the entity's profits and losses.
Capital Balance
The amount of money invested in a company by its owners or shareholders, not including any profits or earnings.
Net Assets
The total assets of an entity minus its total liabilities, representing the entity's equity value or net worth.
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