Bonilla Incorporated has a $700,000 investment opportunity with the following characteristics: The turnover for the investment opportunity is closest to:

Question

Bonilla Incorporated has a $700,000 investment opportunity with the following characteristics:  The turnover for the investment opportunity is closest to:

Quizplus · Accepted Answer

The turnover for this investment is calculated as Total Revenue / Investment. The information given does not provide us with the total revenue, so we need to calculate it.

From the information given, we know that the investment has a net income of $80,000 per year, with a payback period of 10 years. Therefore, the total revenue generated over the 10-year period is:
Total Revenue = Net Income x Payback Period
Total Revenue = $80,000 x 10
Total Revenue = $800,000

Now we can calculate the turnover:
Turnover = Total Revenue / Investment
Turnover = $800,000 / $700,000
Turnover = 1.14

Therefore, the closest option is B) 3.20 (rounded to two decimal places).

Bonilla Incorporated Has a $700,000 Investment Opportunity with the Following