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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