Rate of return on new plant and markup
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Timothy Company has invested $2,000,000 in a plant to make vending machines. The target operating income desired from the plant is $300,000 annually. The company plans annual sales of 1,500 vending machines at a selling price of $2,000 each.
1. What is the target rate of return on investment for Timothy Company?
2. What is the markup percentage as a percentage of cost for Timothy Company?
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