When Calculating the Annual Rate of Return, the Average Investment

question 53

Multiple Choice

When calculating the annual rate of return, the average investment is equal to

• A) (initial investment plus $0) divided by 2.
• B) initial investment divided by life of project.
• C) initial investment divided by 2.
• D) (initial investment plus salvage value) divided by 2.

---

Definitions:

Balance Sheets

A financial statement that presents a company's assets, liabilities, and shareholders' equity at a specific point in time, giving insight into its financial position.

Allowance

An amount set aside as a reduction or probable future expenses or losses, such as an allowance for doubtful accounts.

Equipment

Tangible assets used in the operation of a business, such as machinery, tools, and vehicles, not intended for sale.

Partnership

A legitimate business partnership that involves several people who collaboratively oversee the operation and profit sharing.