Chapter 14, Problem 12F15

To determine

Simple rate of return:

It refers to the rate by which the companies’ estimates that how much an organisation can expect to make off of a capital investment each year. By computing this, the company can quickly recognize that the plan is worth its time and money or not. It is computed by the following formula:

  $\text{Simple rate of return}=\frac{\text{Average Accounting Profits}}{\text{Average Investment}}$

Simple rate of return when salvage value is $300,000.