Rate of return on equity? (ROE). We don't know Roscoe's equity in the business.
Rate of return on investment? (ROI) We don't know Rosoe's investment in the business.
Further, ANY rate of return is expressed as a percentage: 5%, 15%, 30%, etc. Absolute return can be a dollar figure. However, the RATE of return is a percentage, and none of your choices is presented as a percentage.
Hope that helps.
Donald - looks like you're spot on. So it can only be answer e) as none of the others is ever possible since none is a rate of return - they are all amounts not rates.
Roscoe owns an antiques shop in Frenchtown, New Jersey. Roscoe’s total revenues last year were $250,000. Roscoe’s total cost, including his annual salary of $50,000, was $220,000. An antiques auction house would like to hire Roscoe for an annual salary of $75,000 to manage its acquisitions department. Roscoe’s normal rate of return was:
a.
$5,000.
b.
$30,000.
c.
$50,000.
d.
$75,000.
e.
Cannot be determined from the information provided.
I don't understand how to do this. Please help.
Economic profit should be 5,000
Accounting profit should be 3,000
correct me if im wrong
