The X Division of NUBD Products Co. is considering an investment in a new project. The project has an estimated cost of P1,000,000. If NUBD Products Co. has a target rate of return of 12%, how large does the return on investment on this project need to be to generate P170,000 of residual income?

The X Division of NUBD Products Co. is considering an investment in a new project. The project has an estimated cost of P1,000,000. If NUBD Products Co. has a target rate of return of 12%, how large does the return on investment on this project need to be to generate P170,000 of residual income?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

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Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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