Homework Answers
answer a)
ROI = PROFITS/CAPITAL INVESTED
INVESTMENT A=150,800/620,000
=24.32%
INVESTMENT B=165,660/660,000
= 25.1%
answer b) investment B ROI = 25.1%
To earn an ROI of 25.1%
investment A must earn remaining 14860
on a capital of 40,000 i.e. 37.15% of ROI on remaining capital
remaining ROI =14860/40000 = 37.15%
A' profit should be=14860
Capital of A' = 40000
ROI =37.15
also investment B will be a cheaper option when it earns greater return than 25.1% i.e. more profits on the same capital of 660,000
therefore profit>165,660 to become investment B cheaper
Add Answer to:
You have two investment alternatives A and B for comparison. You should use the Return on...
to take advantage of the higher yield? Exercise 3.10 Compare investment alternatives You have accumulated $25,000...
to take advantage of the higher yield? Exercise 3.10 Compare investment alternatives You have accumulated $25,000 and are looking LO 2 for the best rate of return that can be earned over the next year. A bank savings account will pay 3%. A one-year bank certificate of deposit will pay 6%, but the minimum investment is $30,000. Required: a. Calculate the amount of return you would earn if the $25,000 were invested for one year at 3%. b. Calculate the...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. A В C Capital investment Annual expenses $60,000 $90,000 $40,000 $30,000 $70,000 35,000 45,000 15,000 30,000 40,000 25,000 16,000 Annual revenues 50,000 52.000 38,000 28,000 Market value at EOY 10 15,000 10,000 10,000 39.0% 10,000 IRR ??? 7.4% 30.8% 9.2% After the base alternative has been identified, the first comparison to be made in an incremental analysis should be which of...
You must prepare a return on investment analysis for the regional manager of Fast & Great...
You must prepare a return on investment analysis for the
regional manager of Fast & Great Burgers. This growing chain is
trying to decide which outlet of two alternatives to open. The
first location (A) requires a $500,000 investment and is expected
to yield annual net income of $80,000. The second location (B)
requires a $200,000 investment and is expected to yield annual net
income of $40,000.
Compute the return on investment for each Fast & Great Burgers
alternative.
...
You must prepare a return on investment analysis for the regional manager of Fast & Great...
You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $80,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $46,000. Compute the return on investment for each Fast & Great Burgers alternative. Using...
To use internal rate of return (IRR) analysis to select between alternative projects, you should use...
To use internal rate of return (IRR) analysis to select between alternative projects, you should use which technique? a)Simple investing b)Net-investment test c)Incremental investment analysis d)Return-on-invested-capital
Mastery Problem: Return on Investment, margin, and turnover Return on Investment (ROI) The manager of an...
Mastery Problem: Return on Investment, margin, and turnover Return on Investment (ROI) The manager of an investment center should be evaluated based on revenues, costs, and investments. An evaluation based on net income ignores the amount of investment the investment center required. One way to measure operating profit in relation to investment is a calculation called the return on investment. One formula for calculating return on investment is: Operating income Invested Assets ROI is effective because it takes into consideration...
Here is the text book information, trend needs to be return on investment Calculate one financial...
Here is the text book information, trend needs to be
return on investment
Calculate one financial statement ratio trend within your industry that warrants improvement efforts. Make up your own. Return on Investment LO 2 Explain the importance and show the calculation of return on investment. Imagine that you are presented with two investment alternatives. Each investment will be made for one year, and each investment is equally risky. At the end of the year you will get your original...
3. You are evaluating two investment alternatives. One is a passive market portfolio with an expected...
3. You are evaluating two investment alternatives. One is a passive market portfolio with an expected return of 10% and a standard deviation of 16%. The other is a fund that is actively managed by your broker. This fund has an expected return of 15% and a standard deviation of 20%. The risk-free rate is currently 7%. Answer the questions below based on this information. a. What is the slope of the Capital Market Line? b. What is the slope...
You have two investment opportunities. One will have an 7.0% rate of return on an investment...
You have two investment opportunities. One will have an 7.0%
rate of return on an investment of $540; the other will have a
10.0% rate of return on principal of $690. You would like to take
advantage of the higher-yielding investment but have only $540
available.
Required:
What is the maximum rate of interest that you would pay to borrow
the $150 needed to take advantage of the higher yield? (Do
not round intermediate calculations. Round your answer to 2...
Suppose that you have only two investment alternatives. One is an interest-bearing asset such as a...
Suppose that you have only two investment alternatives. One is an interest-bearing asset such as a GIC, earning an annual rate of return r. The other is a gold bullion, the unit price of which is pt in year t. Write down the equilibrium condition which must hold if you are to keep some of both assets in your portfolio.
to take advantage of the higher yield? Exercise 3.10 Compare investment alternatives You have accumulated $25,000 and are looking LO 2 for the best rate of return that can be earned over the next year. A bank savings account will pay 3%. A one-year bank certificate of deposit will pay 6%, but the minimum investment is $30,000. Required: a. Calculate the amount of return you would earn if the $25,000 were invested for one year at 3%. b. Calculate the...
The following mutually exclusive investment alternatives have been presented to you. The life of all alternatives is 10 years. A В C Capital investment Annual expenses $60,000 $90,000 $40,000 $30,000 $70,000 35,000 45,000 15,000 30,000 40,000 25,000 16,000 Annual revenues 50,000 52.000 38,000 28,000 Market value at EOY 10 15,000 10,000 10,000 39.0% 10,000 IRR ??? 7.4% 30.8% 9.2% After the base alternative has been identified, the first comparison to be made in an incremental analysis should be which of...
You must prepare a return on investment analysis for the
regional manager of Fast & Great Burgers. This growing chain is
trying to decide which outlet of two alternatives to open. The
first location (A) requires a $500,000 investment and is expected
to yield annual net income of $80,000. The second location (B)
requires a $200,000 investment and is expected to yield annual net
income of $40,000.
Compute the return on investment for each Fast & Great Burgers
alternative.
...
You must prepare a return on investment analysis for the regional manager of Fast & Great Burgers. This growing chain is trying to decide which outlet of two alternatives to open. The first location (A) requires a $500,000 investment and is expected to yield annual net income of $80,000. The second location (B) requires a $200,000 investment and is expected to yield annual net income of $46,000. Compute the return on investment for each Fast & Great Burgers alternative. Using...
Here is the text book information, trend needs to be
return on investment
Calculate one financial statement ratio trend within your industry that warrants improvement efforts. Make up your own. Return on Investment LO 2 Explain the importance and show the calculation of return on investment. Imagine that you are presented with two investment alternatives. Each investment will be made for one year, and each investment is equally risky. At the end of the year you will get your original...
3. You are evaluating two investment alternatives. One is a passive market portfolio with an expected return of 10% and a standard deviation of 16%. The other is a fund that is actively managed by your broker. This fund has an expected return of 15% and a standard deviation of 20%. The risk-free rate is currently 7%. Answer the questions below based on this information. a. What is the slope of the Capital Market Line? b. What is the slope...
You have two investment opportunities. One will have an 7.0%
rate of return on an investment of $540; the other will have a
10.0% rate of return on principal of $690. You would like to take
advantage of the higher-yielding investment but have only $540
available.
Required:
What is the maximum rate of interest that you would pay to borrow
the $150 needed to take advantage of the higher yield? (Do
not round intermediate calculations. Round your answer to 2...
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 10 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 10 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 10 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 10 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 10 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 10 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 10 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 10 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 10 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 10 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 10 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 10 months ago