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Question 12
of 25 Step 4 of 5
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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 while SO Interiors had a net income of . Both companies built a business plan for future growth beyond the third year. Portrait Inc projected an increase in net income of per year, while SO interiors’ plan aimed to increase its net income by 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
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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.

Ask by Valdez Mathis. in the United States
Jan 23,2025

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If you invest for less than 4 years, Portrait Inc. offers quicker returns. If you invest for more than 4 years, SO Interiors will have faster-growing net income.

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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!

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