(Ignore income taxes in this problem.) Chow Company has gathered the following data on a proposed investment project:
-The simple rate of return on the investment is closest to:

Question

(Ignore income taxes in this problem.) Chow Company has gathered the following data on a proposed investment project: 
-The simple rate of return on the investment is closest to:

Quizplus · Accepted Answer

Simple Rate of Return = (Profit / Initial Investment) x 100
Profit = Revenue - Expenses
Profit = $37,800 - ($18,000 + $6,000 + $4,200) = $9,600
Simple Rate of Return = ($9,600 / $112,000) x 100 = 8.57% (rounded to 2 decimal places)
Therefore, the closest answer is A) 8.55%.

(Ignore Income Taxes in This Problem