Question 12 of 25 Step 4 of 5 No пime Limit Let's compare two relatively new companies who began operations at the same time, Portrait inc and 50 Interiors. In their third year of business, Portrait inc had a net income of \( \$ 325,000 \) while SO Interiors had a net income of \( \$ 215,000 \). Both companies built a business plan for future growth beyond the third year. Portrait Inc projected an increase in net income of \( \$ 27,000 \) per year, while SO interiors' plan aimed to increase its net income by \( 19 \% \) each year. Step 4 of S: 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 Portrait inc: If you are able to invest money for less than 4 years, then you will get a quick return on your investment. Portrait Inc: If you are able to invest money for more than 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 4 years, then their income will continue to grow at a faster rate. SO Interiors: If you are able to invest money for less than 4 years, then you will get a quick return on your investment.
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The Deep Dive
After analyzing the projected growth rates, it seems that Portrait Inc's steady increase of $27,000 per year might not seem as flashy as SO Interiors' 19% annual growth, but it’s consistent. In practical terms, this translates to a net income of $325,000 in year three, growing to $352,000 in year four for Portrait Inc, while SO Interiors would see a jump to approximately $255,850. If you're looking for reliability within the first few years, Portrait Inc appears stronger. However, looking at the longer-term, SO Interiors' compounding growth could potentially outpace Portrait Inc after a few years. By the fifth year, for instance, it could scale up to nearly $304,000, showing a more aggressive upward trajectory. If you're willing to wait, SO Interiors might become the sleeker investment choice after that mark, particularly if those percentage increases hold steady. Remember, balancing short-term versus long-term gains is key in investment decisions!
