(Ignore income taxes in this problem.) Joetz Corporation has gathered the following data on a proposed investment project:
The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
-The simple rate of return for the investment (rounded to the nearest tenth of a percent)is:

Question

(Ignore income taxes in this problem.) Joetz Corporation has gathered the following data on a proposed investment project:
  The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment.
-The simple rate of return for the investment (rounded to the nearest tenth of a percent)is:

Quizplus · Accepted Answer

11ea7761_15bf_4152_81a5_2136c1a01155_TB2580_00 Simple rate of return = Annual incremental net operating income ÷ Initial investment
= $4,000 ÷ $30,000 = 13.3% (rounded)

(Ignore Income Taxes in This Problem