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    Calculating Rate on Return and Profit Margin

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    Problem1
    Bass Chemical, Inc., is considering expanding into a new product line. New assets to support expansion will cost $1,200,000. Bass estimates that it can generate $2 million in annual sales, with a 5 percent profit margin. What would net income and return on assets (investment) be for the year?

    Problem 2
    Hugh Snore Bedding, Inc., has assets of $400,000 and turns over its assets 1.5 times per year. Return on assets is 12 percent. What is its profit margin (return on sales)?

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    Solution Preview

    Solution 1
    Bass Chemical, Inc., is considering expanding into a new product line. New assets to support expansion will cost $1,200,000. Bass estimates that it can generate $2 million in annual sales, with a 5 ...

    Solution Summary

    The solution describes the steps in calculating Rate of return and Profit Margins for specified problems.

    $2.19

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