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10 June, 00:44

Database Systems is considering expansion into a new product line. Assets to support expansion will cost $750,000. It is estimated that Database can generate $2,150,000 in annual sales, with an 7 percent profit margin. What would net income and return on assets (investment) be for the year? (Input your return on assets answer as a percent rounded to 2 decimal places.)

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  1. 10 June, 02:26
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    Net income = $ 150500

    Return on assets = 20.07 %

    Explanation:

    Net income = (annual sales) * 7%

    = $ 2150000*7%

    = $ 150500

    return on assets = [net income*100]/[assets to support expansion]

    = (150500) (100) / (750000)

    = 20.07 %

    Therefore, the Net income for the year is $ 150500 and the Return on assets for the year is 20.07 %.
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