Frank Company, which has total assets of $300,000, has an opportunity to invest $80,000 in a new project that will generate a return of $16,000 per year. Given this information, what is the return on this investment?

Question

Quizplus · Accepted Answer

To determine the return on this investment, we can calculate the annual return as a percentage of the investment amount.

Annual return = $16,000 
Investment amount = $80,000

Return on investment = Annual return / Investment amount 
Return on investment = $16,000 / $80,000 
Return on investment = 0.2

Therefore, the return on this investment is 20%, which corresponds to answer choice B.

Frank Company, Which Has Total Assets of $300,000, Has an Opportunity