Question

Answer the question please see image

Answer 1

Answer:

For company A ,

MV=80 , FV=100,DIVIDEND=20

∴ RATE OF RETURN =16÷80×100=20

For company B

MV=120,FV=100,DIVIDEND = 20

∴ RATE OF RETURN=20÷120×100=16.66666667

∴COMPANY A IS MORE PROFITABLE THAN COMPANY B