Using the following information calculate the average return on investment

Posted by: Pdfprep Category: CPIM-SMR Tags: , ,

Using the following information calculate the average return on investment

Purchase Price = $50,000

Life span of new machine = 7 years

Annual earnings before depreciation and tax = 20,000
A . 450%
B . 40%
C . 250%
D . 70%

Answer: B

Explanation:

Average Return on investment = annual net income * 100/ Initial cash investment=(20000*100)/50000= 40%

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