If a project costs $3,500 today and pays a return of $4,200 next year, what is the highest interest rate at which the project should be undertaken?
A) 7 percent
B) 14 percent
C) 20 percent
D) 70 percent

Question

Quizplus · Accepted Answer

The highest interest rate at which the project should be undertaken is calculated by finding the rate of return, which is (4200 - 3500) / 3500 = 0.2 or 20%.

If a Project Costs $3,500 Today and Pays a Return