Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment. What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment. What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Osler Company is considering an investment with the following data:
Depreciation will be taken on a straight-line basis over the expected life of the investment.
What is the accounting rate ofreturn for the investment ?
| Initial cost | $200,000 |
| Annual net |
$25,000 |
| Expected life | 10 years |
| Salvage value | none |
What is the accounting rate of
a.12.5%
b.2.5%
c.20%
d.25%
e.10%
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