An Investment That Requires Initial Cash Outlay of $100,000 Has

question 40

Multiple Choice

An investment that requires initial cash outlay of $100,000 has a useful life of 3 years. In each of these years the before-tax cash flow is $40,000. If the tax rate is 34% and straight-line depreciation is used, the average accounting return is:

• A) 40.00%.
• B) 26.40%.
• C) 13.34%.
• D) 8.80%.

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Definitions:

Possesses

To have or hold property, items, or qualities, indicating ownership or control over such.

Receive

The act of accepting or taking possession of something that has been given, sent, or awarded to someone.

Destination Contracts

Contracts specifying that the seller is responsible for the delivery of goods to a specific destination.