The expected average rate of return for a proposed investment of $650,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, is

A) 13.9%
B) 36.9%
C) 18.5%
D) 9.25%

Question

Kabao Xiong · Accepted Answer

Final Answer : C, Explanation :  The average annual net income is $240,000 / 4 = $60,000. The average investment is $650,000 / 2 = $325,000. The average rate of return is ($60,000 / $325,000) * 100 = 18.5%.

The expected average rate of return for a proposed investment of $650,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, is

A) 13.9%
B) 36.9%
C) 18.5%
D) 9.25%

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The expected average rate of return for a proposed investment of $650,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, isA) 13.9%B) 36.9%C) 18.5%D) 9.25%

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Learning Objectives

Learning Objectives

Related questions

The expected average rate of return for a proposed investment of $650,000 in a fixed asset, with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total net income of $240,000 for the 4 years, is

A) 13.9%
B) 36.9%
C) 18.5%
D) 9.25%