Suppose that new computer software for accounting and analysis at a business has a useful life of only one year and costs $200,000 before it needs to be upgraded to a new version.The revenue generated by this software is expected to be $250,000.The expected rate of return from this new computer software is
A)11 percent.
B)20 percent.
C)25 percent.
D)80 percent.

Question

Quizplus · Accepted Answer

The expected rate of return is calculated as (Revenue - Cost) / Cost. Here, it is ($250,000 - $200,000) / $200,000 = $50,000 / $200,000 = 0.25 or 25 percent.

Suppose That New Computer Software for Accounting and Analysis at a Business