Answer :
Target rate of return = $156,000 / $1,040,000 = 0.15=15%
Target rate of return is calculated by dividing the target operating income by the company's invested amount in plants.
What is target return and exchange policy?
According to Target's regular return policy, you have 90 days from the date of purchase to return an item for a full refund or exchange. Most of the time, you'll receive your refund in the same payment method that you first used to make the transaction. In rare circumstances, you might have to accept an exchange if the product has been used or is damaged.
What rate of return can you reasonably expect?
The key to this whole equation is being conservative with your return estimate, and instead concentrating on what you can actually control, the savings rate. So, in a nutshell, my opinion is that you would be fortunate to average around 7-8% rate of return over a long-term basis. There will be periods in which you get a 20% rate of return.
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