The expected average rate of return for a proposed investment of $539,100 in a fixed asset...

The expected average rate of return for a proposed investment of $539,100 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total income of $269,440 for the 4 years is (round to two decimal places) a.12.49% b.1.00% c.24.99% d.0.50%

Expert Solution

Answer:

Average investment
            = Proposed investment / 2
            =   $ 539,100 / 2
            =    $ 269,550

Average Annual Net income
             = Net Income / Total Years
             =   $ 269,440 / 4 Years
             =   $ 67,360

Average rate of Return
          =   Average Annual Net income / Average investment
          =    $ 67,360 / $ 269,550
          =      24.99%

Average rate of Return = 24.99%

Option (C ) is Correct

ekkarill92 answered 2 years ago

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