Cellgene Biometrics, a small biotech company, uses a MARR of 40% per year when evaluating new investments. If the inflation rate is 9% per year, what will the real rate of return be, provided it realizes its optimistic MARR objective?

What will be an ideal response?


0.40 = i + 0.09 + i(0.09)
1.09i = 0.31
i = 0.284 (28.4% per year)

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