The Following Information Was Presented by Shower Wonder Enterprises for an Asset

question 45

Multiple Choice

The following information was presented by Shower Wonder Enterprises for an asset purchased at the beginning of the previous year.
$$\begin{array} { l c } \text { Original cost of the asset } & \$ 20,000 \\\text { Useful life of the asset } & 10 \text { years } \\\text { Annual operating profit, including depreciation } & \$ 4,000 \\\text { Salvage value } &\$ - 0 -\end{array}$$ .
What is the return on investment (ROI) assuming Shower Wonder uses (a) the straight-line method for depreciation and (b) average net book values to compute ROI?

• A) 21.1%.
• B) 20.0%.
• C) 22.2%.
• D) 11.76%.

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Definitions:

Pegged Currencies

A regime where a country's currency value is fixed relative to another currency or a basket of currencies.

U.S. Dollar

The official currency of the United States, widely used as a benchmark and reserve currency around the world.

International Transactions

Deals that involve the exchange of goods, services, or financial assets across national borders.

Asset Transactions

Financial activities involving the buying, selling, or exchange of assets, which can include tangible and intangible assets.