$\begin{array} { lr }
\text{Tatal sales revenue}&\text { \$ 10,000,000 } \
\text{Less: Develapment cost}&\text { 6,000,000 } \
\text{Less: Land asking price}& \underline{1,000,000} \
\text{Patential gross profit}&\$ 3,000,000 \
\text{Less: Admin., legal, commissians, etc.}&\underline{1,500,000} \
\text{Patential net profit}&\underline{\$ 1,500,000} \
\end{array}$
-Consider the feasibility study shown in the table above. What is the return on total cost for the proposed project?
A) 15.0%
B) 17.6%
C) 21.4%
D) 150.0%

Question

$\begin{array} { lr } 
\text{Tatal sales revenue}&\text { \$ 10,000,000 } \ 
\text{Less: Develapment cost}&\text { 6,000,000 } \ 
\text{Less: Land asking price}& \underline{1,000,000} \
\text{Patential gross profit}&\$ 3,000,000 \ 
\text{Less: Admin., legal, commissians, etc.}&\underline{1,500,000} \ 
\text{Patential net profit}&\underline{\$ 1,500,000} \ 
 \end{array}$
-Consider the feasibility study shown in the table above. What is the return on total cost for the proposed project?
A) 15.0%
B) 17.6%
C) 21.4%
D) 150.0%

Quizplus · Accepted Answer

The return on total cost is calculated by dividing the potential net profit by the total cost of the project. The total cost of the project is the sum of the development cost and the land asking price, which is $6,000,000 + $1,000,000 = $7,000,000. The potential net profit is $1,500,000. Therefore, the return on total cost is $1,500,000 / $7,000,000 = 15.0%.

-Consider the Feasibility Study Shown in the Table Above