The information given in Prob. 2 applies to conditions before income taxes. If 34 percent of all profits must be paid out for income taxes, determine the standard rate of return after taxes using the figures given in Prob. 2
Prob. 2
An investigation of a proposed investment has been made. The following result has been presented to management: The minimum payout period based on capital recovery using a minimum annual return of 10 percent as a fictitious expense is 10 years; annual depreciation costs amount to 8 percent of the total investment. Using this information, determine the standard rate of return on the investment.