(Ignore income taxes in this problem.) Oriental 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 on the investment would be:

Question

(Ignore income taxes in this problem.) Oriental 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 on the investment would be:

Quizplus · Accepted Answer

11ea7761_15bf_b685_81a5_6784dce94f56_TB2580_00 Simple rate of return = Annual incremental net operating income ÷ Initial investment
= $30,000 ÷ $200,000 = 15%

(Ignore Income Taxes in This Problem