19 The expected average rate of return for a proposed investment of $4,390,000 in a fixed...
19
The expected average rate of return for a proposed investment of $4,390,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $8,780,000 over the 20 years is (round to two decimal points).
a.40.00%
b.1.00%
c.20.00%
d.10.00%
Homework Answers
Average rate of return
= Annual net income / Average investment
= (8,780,000/20) / (4,390,000/2)
= 439,000 / 2,195,000
= 20%
Option C
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19
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