The amount of the average investment for a proposed investment of $120,000 in a fixed asset with a useful life of 4 years, straight-line depreciation, no residual value, and an expected total income of $21,600 for the 4 years is

Question

Quizplus · Accepted Answer

The average investment is calculated as the sum of the initial investment and the value at the end of its useful life, divided by 2. Since there's no residual value, the value at the end of its useful life is $0. The initial investment is $120,000. So, the average investment = ($120,000 + $0) / 2 = $60,000.

The Amount of the Average Investment for a Proposed Investment