Let's compare two relatively new companies who began operations at the same time, Portrait Inc and SO Interiors. In their third year of business, Portrait Inc had a net income of \( \$ 310,000 \) while SO Interiors had a net income of \( \$ 200,000 \). Both companies built a business plan for future growth beyond the third year. Portrait Inc projected an increase in net income of \( \$ 25,500 \) per year, while SO Interiors' plan aimed to increase its net income by \( 16 \% \) each year. Step 4 of 5: If both companies were able to meet their net income growth goals, which company would you choose to invest in? Why? Select all answers that apply. Answer 2 Points Keypad Keyboard Shortcuts SO Interiors: If you are able to invest money for less than 5.4 years, then you will get a quick return on your investment. Portrait Inc: If you are able to invest money for less than 5.4 years, then you will get a quick return on your investment. Portrait Inc: If you are able to invest money for more than 5.4 years, then their income will continue to grow at a faster rate. SO Interiors: If you are able to invest money for more than 5.4 years, then their income will continue to grow at a faster rate.
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Beyond the Answer
Investing in Portrait Inc could be a solid choice if you're considering a longer investment horizon. Starting with a higher net income and projecting a steady increase of \( \$ 25,500 \) each year allows for a solid, predictable profit growth that can yield impressive returns over time. This consistency may appeal more to risk-averse investors looking for stability. On the other hand, SO Interiors showcases a dynamic growth plan with a projected annual increase of \( 16\% \). This means their income grows exponentially, which can lead to higher returns in the long term, especially beyond the 5.4-year mark. If you're willing to embrace a bit more risk for potentially greater rewards, this company could be a compelling option!
