If a project costs $700 and is expected to return $790 to shareholders in one years time,then the rate of return on the investment is 12.86%.

Question

Quizplus · Accepted Answer

To calculate the rate of return on investment, we use the formula:

Rate of return = (Final value - Initial value) / Initial value x 100%

In this case, the initial value or cost of the project is $700, and the final value or return to shareholders is $790 after one year.

So,

Rate of return = ($790 - $700) / $700 x 100%

Rate of return = $90 / $700 x 100%

Rate of return = 0.1286 x 100%

Rate of return = 12.86%

Therefore, the statement "If a project costs $700 and is expected to return $790 to shareholders in one year's time, then the rate of return on the investment is 12.86%" is true, and the answer is A.

If a Project Costs $700 and Is Expected to Return