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    Financial Accounting : Return on Investment

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    BE2-25 Smolinski Company is considering an investment which will return a lump sum of $500,000 five years from now. What amount should Smolinski Company pay for this investment to earn a 15% return?

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    Let the price the company has to pay be P.

    In five years time the company needs to pay out an amount of $500,000.

    If the company invested P just now at a rate of 15% per annum (this is the rate of return required ...

    Solution Summary

    A return on investment problem is solved and explained.