A new security system has a price-tag of $8,000, but should save your company $3,600 each year for the next 10 years in reduced

Question

Alexxx [7]

2 years ago

5

A new security system has a price-tag of $8,000, but should save your company $3,600 each year for the next 10 years in reduced

thefts. What is the profitability index of the security system

Business

1 answer:

tensa zangetsu [6.8K] · Answer 1 · 2023-10-06T18:43:59+03:00

If the required rate of return is 7.2%, no such security shall be purchased.

<h3>What does the required rate of return mean?</h3>

The required rate of return is the expected percentage of returns on investment at the time the investment is made. The required rate of return, in this case, is 7.2%.

The actual returns earned from purchasing the security for $8000 and receiving returns of $3600 are calculated to be around a 3.6% return.

As a result, if the required rate of return on investment is 7.2%, the security should not be purchased.

Read more about the required rate of return here:

brainly.com/question/13987385

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