The cost of capital for a new project is $55,000. The project is expected to yield $20,000 in year one and $40,000 in year two. What is the approximate rate of return over this period?

Question

Quizplus · Accepted Answer

The approximate rate of return over this period is 5.4%. This is calculated by dividing the total profit ($60,000) by the cost of capital ($55,000) and multiplying by 100.

The Cost of Capital for a New Project Is $55,000