Question

Poppy's Gumball Co. is planning to invest in a new marketing campaign that requires an initial investment of $85,000 and is expected to provide incremental annual income of $27,200. The simple rate of return on the project is Blank______.

Multiple choice question.

212.5%


312.5%


32%


47%

Answer 1

To calculate the simple rate of return on Poppy's Gumball Co.'s new marketing campaign, you can use the following formula:

\[
\text{Simple Rate of Return} = \left( \frac{\text{Annual Income}}{\text{Initial Investment}} \right) \times 100
\]

Substituting the values from the problem:

\[
\text{Simple Rate of Return} = \left( \frac{27,200}{85,000} \right) \times 100
\]

Calculating this:

\[
\text{Simple Rate of Return} = \left( 0.32 \right) \times 100 = 32\%
\]

Therefore, the simple rate of return on the project is **32%**.