If a 1-year project costs $100 000 and is expected to return the firm $105 000,the rate of return of the project is:

Name: If a 1-year project costs $100 000 and is expected to return the firm $105 000,the rate of return of the project is:
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Question

Quizplus · Accepted Answer

To find the rate of return, we need to calculate the profit as a percentage of the cost. In this case, the profit is $5,000 ($105,000 - $100,000) and the cost is $100,000.

Profit/Cost = Rate of Return

$5,000/$100,000 = 0.05 or 5%

Therefore, the answer is B) 5%.

If a 1-Year Project Costs $100 000 and Is Expected