An Initial Investment of $180,000 Is Expected to Generate $75,000

question 128

Multiple Choice

An initial investment of $180,000 is expected to generate $75,000 in annual cost savings over the asset's expected 3- year life. Assume straight- line depreciation and ignore income taxes. The accounting rate of return based on initial investment is:

• A) 16.67%
• B) 41.67%
• C) 8.33%
• D) None of these answers is correct.