A company that manufactures high-strength epoxys is considering investing $100,000 in two new adhesives identified as X and Z. The investment in X is $20,000 and is expected to yield a rate of return of 40% per year. Your supervisor asked you to determine what rate of return would be required on the remaining $80,000 in order for the total return to be at least 25%. You responded that the return would have to be at least: (a) 10.4% (b) 16.8% (c) 21.3% (d) 24.1%
A company that manufactures high-strength epoxys is considering investing $100,000 in two new adhesives identified as X and Z. The investment in X is $20,000 and is expected to yield a rate of return of 40% per year. Your supervisor asked you to determine what rate of return would be required on the remaining $80,000 in order for the total return to be at least 25%. You responded that the return would have to be at least: (a) 10.4% (b) 16.8% (c) 21.3% (d) 24.1%
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...
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Question
A company that manufactures high-strength epoxys
is considering investing $100,000 in two new
adhesives identified as X and Z. The investment in
X is $20,000 and is expected to yield a
of 40% per year. Your supervisor asked you to
determine what rate of return would be required on
the remaining $80,000 in order for the total return
to be at least 25%. You responded that the return
would have to be at least:
(a) 10.4%
(b) 16.8%
(c) 21.3%
(d) 24.1%
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