Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question

Transcribed Image Text:Variable
Fixed
140,000
107,500
Selling and administrative:
Variable
Fixed
60,000
Total costs
80,000
Pershing has a target profit of $150,000.
$705,000
If total invested capital is $1,000,000, what is the company's target rate of return on investment?
O A. 20 %
O B. 25 %
O C. 35 %
O D. 30 %
O E. 15 %
Click to select your answer.

Transcribed Image Text:Pershing Company budgeted the following costs for the production of its one and only product, blades, for the next fiscal year:
Direct materials
$187,500
130,000
Direct labour
Factory overhead;
Variable
140,000
Fixed
107,500
Selling and administrative:
Variable
60,000
80,000
$705,000
Fixed
Total costs
Pershing has a target profit of $150,000.
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