Based on the information in Table B-1, and assuming a 50 percent tax on net profit, the return on investment is:
A) 12.3%.
B) 25.0%.
C) 9.9%.
D) 10.0%.
E) The return is negative because the firm had a loss.

Question

Quizplus · Accepted Answer

To calculate the return on investment, we need to first calculate the net profit. We do this by subtracting the total expenses from the total revenues:
Total Revenues - Total Expenses = Net Profit
$70,000 - $50,000 = $20,000
We then apply the 50 percent tax rate to the net profit:
$20,000 x 0.5 = $10,000
Finally, we calculate the return on investment as the net profit after taxes divided by the total investment:
$10,000 / $100,000 = 0.10 or 10.0%
Therefore, the correct answer is D) 10.0%.

Based on the Information in Table B-1, and Assuming a 50