Question
Norfolk Savings Bank is considering the establishment of a new branch office at the corner of 49th Street and Hampton Boulevard. The savings associations economics
Norfolk Savings Bank is considering the establishment of a new branch office at the corner of 49th Street and Hampton Boulevard. The savings associations economics department projects annual operating revenues of $1.7 million from fee income generated by service sales and annual branch operating expenses of $700,000. The cost of procuring the property is $2.25 million and branch construction will total an estimated $3.75 million; the facility is expected to last 20 years. If the savings bank has a minimum acceptable rate of return on its invested capital of 17 percent, will Norfolk Savings likely proceed with this branch office project?
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