The expected average rate of return for a proposed investment of $6,250,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $12,500,000 over the 20 years, is (round to two decimal places) a.40.00% b.20.00% c.10.00% d.1.00%

The expected average rate of return for a proposed investment of $6,250,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $12,500,000 over the 20 years, is (round to two decimal places) a.40.00% b.20.00% c.10.00% d.1.00%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1BE: Average rate of return Determine the average rate of return for a project that is estimated to yield...

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The expected average rate of return for a proposed investment of $6,250,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $12,500,000 over the 20 years, is (round to two decimal places)

a.40.00%

b.20.00%

c.10.00%

d.1.00%

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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