A Division of a Firm Has a Net Profit of $640

question 49

Multiple Choice

A division of a firm has a net profit of $640 000 before imputed interest and a residual income of $240 000. If a rate of 10 per cent is used to compute imputed interest, calculate the division's return on investment (rounded to a whole number) .

• A) 4%
• B) 10%
• C) 16%
• D) 35%

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Definitions:

Crowdfunding

A cooperative activity in which people network and pool funds and other resources via the Internet to assist a cause (such as disaster relief) or invest in a business venture (such as a startup).

Raise Capital

The process of generating funds or resources for a business or project, typically through investments, loans, or selling equity.

Public

Pertains to the community as a whole or the people of a society.

Private Equity Capital

Capital funds invested by a private equity firm in an existing corporation, usually to purchase and reorganize it.