Suppose you could invest $1 million in inventory,which you expect to be able to sell at $1,500,000.If you expect your total selling costs to be $200,000,your expected profit rate would be _______ percent.

Question

Quizplus · Accepted Answer

The expected profit would be the difference between the selling price and the total cost of inventory and selling costs. 
Expected profit = Selling price - Cost of inventory - Selling costs 
Expected profit = $1,500,000 - $1,000,000 - $200,000 
Expected profit = $300,000

To calculate the expected profit rate, we need to divide the expected profit by the cost of inventory and then multiply by 100% to get a percentage. 
Expected profit rate = (Expected profit / Cost of inventory) x 100% 
Expected profit rate = ($300,000 / $1,000,000) x 100% 
Expected profit rate = 30%

Therefore, the best choice is option C) 30.

Suppose You Could Invest $1 Million in Inventory,which You Expect