Ostead Company is considering an investment with the following data:
Depreciation will be taken on a straight-line basis over the expected life of the investment.
$$\begin{array} { l r }
\text { Initial cost } & \$ 200,000 \
\text { Annual net cash inflows } & \$ 25,000 \
\text { Expected life } & 10 \text { years } \
\text { Salvage value } & \text { none }
\end{array}$$
-Refer to the Figure.What is the accounting rate of return for the investment?

Question

Ostead Company is considering an investment with the following data:
Depreciation will be taken on a straight-line basis over the expected life of the investment.
 $$\begin{array} { l r } 
\text { Initial cost } & \$ 200,000 \
\text { Annual net cash inflows } & \$ 25,000 \
\text { Expected life } & 10 \text { years } \
\text { Salvage value } & \text { none }
\end{array}$$
-Refer to the Figure.What is the accounting rate of return for the investment?

Quizplus · Accepted Answer

The Answer of Ostead Company is considering an investment with the following data:
Depreciation will be taken on a straight-line basis over the expected life of the investment.
 $$\begin{array} { l r } 
\text { Initial cost } & \$ 200,000 \
\text { Annual net cash inflows } & \$ 25,000 \
\text { Expected life } & 10 \text { years } \
\text { Salvage value } & \text { none }
\end{array}$$
-Refer to the Figure.What is the accounting rate of return for the investment?

Ostead Company Is Considering an Investment with the Following Data