A small construction company has $100,000 set aside in a capital improvement fund to purchase new equipment. If $30,000 is invested at 30%, $20,000 at 25%, and the remaining $50,000 at 20% per year, what is the overall rate of return on the entire $100,000?
What will be an ideal response?
Overall ROR: 100,000(i*) = 30,000(0.30) + 20,000(0.25) + 50,000(0.20)
i* = 0.24 (24% per year)
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What will be an ideal response?
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