Below are two potential investment alternatives:
Assume straight-line amortization in all computations, and ignore income taxes.
-The accounting rate of return based on INITIAL investment in case B is
A) 38.67 percent.
B) 2.59 percent.
C) 5.33 percent.
D) 2.40 percent.

Question

Below are two potential investment alternatives:
  Assume straight-line amortization in all computations, and ignore income taxes.
-The accounting rate of return based on INITIAL investment in case B is
A) 38.67 percent. 
B) 2.59 percent. 
C) 5.33 percent. 
D) 2.40 percent.

Quizplus · Accepted Answer

The accounting rate of return (ARR) is calculated by dividing the average annual profit by the initial investment. The correct choice is based on the given options and calculations.

Below Are Two Potential Investment Alternatives