Rutland Rocking Chair is looking to buy a new building to sell its rocking chairs. Rutland desires an average rate of return of 15% on this investment.
If a building has an average annual income after taxes of $150,000 and a salvage value of $25,000, how much should Rutland invest in the initial cost of the building?
a. $1,000,000
b. $945,000
c. $1,250,000
d. $750,000