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Worksheets2.4.1 - Business calculations (Part B)
Total questions: 13
Worksheet time: 10mins
Which of the following best describes the main reason why a business might calculate the average rate of return (%) for several proposed long term investments?
To determine the proportion of revenue left after paying cost of sales
To help decide which investment to finance
To determine the proportion of revenue left after paying total costs
To help decide which investment brings in the most revenue
Which of the following is true in relation to average rate of return? The average rate of return measures the:
Average annual revenue as a % of the sum invested
Average annual profit as a % of the sum invested
Average annual costs as a % of the sum invested
Average annual sales turnover as a % of the sum invested
Which of the following is an example of an investment that an expanding independent clothing retailer is most likely to choose to finance?
Buying new office furniture
Purchasing new vehicles
Buying personalised stationery
Opening a new store
Which of the following is the correct formula to calculate average rate of return (%)?
Average annual profit x 100
Cost of investment
Cost of investment x 100
Average annual profit
Total profit x 100
Cost of investment
Cost of investment x 100
Total profit
The expected total profit over 4 years of a £26,000 proposed investment is estimated to be £46,000. Based on this information, which of the following is the correct average rate of return (%) for this investment?
14.13%
44.23%
76.92%
176.92%
Which of the following is true in relation to the average rate of return?
It is always expressed as a percentage
The lower the better
Zero is the ideal rate
It is always expressed in pounds (£s)
The table below shows some financial data for a proposed investment:
Based on the above information, which of the following is the correct the average rate of the return (%) for this investment?
8%
11.11%
12.5%
14.29%
The cost of a proposed investment of a business is £10,000. The estimated total annual profit over 5 years is £20,000. Based on this information, which of the following is the correct average rate of return (%) for this investment?
4%
40%
50%
200%
The average annual profit of a proposed investment is £300,000 and the cost of investment is £1.5 million. Based on this information, which of the following is the correct the average rate of the return (%) for this investment?
5%
16.67%
20%
25%
Which of the following is the correct formula to calculate average annual profit?
Total profit / number of years x 100
Number of years / total profit x 100
Total profit / number of years
Number of years / total profit
A business invests in a new piece of machinery costing £15,000. The average yearly profit expected from this investment is expected to be £5,000 across 5 years. Based on this information, which of the following is the correct average rate of return (%) for this investment?
6.67%
33.33%
60%
75%
Which two of the following of examples of proposed investments?
Buying raw materials
Buying a new computer system
Buying a new vehicle
Buying stock
Buying stationery
Which two of the following are true in relation to the information in the table below?
Proposed investment:
B has a better average rate of return than C
E has a better average rate of return than B
D has a better average rate of return than B
C has a better average rate of return than A
E has a better average rate of return than D
