Oakland Shop Is Considering the Purchase of a Used Printing

question 5

Multiple Choice

Oakland Shop is considering the purchase of a used printing press costing $9,600.The printing press would generate a net cash inflow of $4,000 per year for three years.At the end of three years,the press would have no salvage value.The company's cost of capital is 10 percent.The company uses straight-line depreciation with no mid-year convention. What is the accounting rate of return on the original investment in the press to the nearest percent,assuming no taxes are paid?

• A)41.67%
• B)8.33%
• C)75.00%
• D)10.00%

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