Which of the following is another term for target return percentage?

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Multiple Choice

Which of the following is another term for target return percentage?

Understanding how target returns translate into pricing starts with recognizing that the term describing the percentage added to cost to achieve that return is markup. When you set a target return, you’re deciding how much profit to add on top of the cost, and that profit is expressed as a markup on cost. The selling price becomes cost × (1 + markup). For example, with a $100 cost and a 30% target return, the markup is 30%, so the price would be $130. Margin, yield, and commission refer to different concepts: margin is profit as a percentage of selling price, yield is a return relative to investment or cost depending on context, and commission is a salesperson’s fee.

Understanding how target returns translate into pricing starts with recognizing that the term describing the percentage added to cost to achieve that return is markup. When you set a target return, you’re deciding how much profit to add on top of the cost, and that profit is expressed as a markup on cost. The selling price becomes cost × (1 + markup). For example, with a $100 cost and a 30% target return, the markup is 30%, so the price would be $130. Margin, yield, and commission refer to different concepts: margin is profit as a percentage of selling price, yield is a return relative to investment or cost depending on context, and commission is a salesperson’s fee.

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