The expected average rate of return for a proposed investment of $4,150,000 in a fixed asset, using straight-line depreciation, a useful life of 20 years, no residual value, and an expected total income of $8,300,000 over the 20 years, is (round to two decimal places)
a.40.00%
b.20.00%
c.10.00%
d.1.00%
Answer: b.20.00%
Average Investment = $4150000 / 2 = $2075000
Average Income = $8300000 / 20 = $415000
Expected average Rate of Return for a Proposed Investment = $415000 / $2075000 = 20%
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