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An Investment of $5,000 Provides an Average Net Cash Flows

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An investment of $5,000 provides an average net cash flows of $320 with zero salvage value. Depreciation is $35 per year. The accounting rate of return using the original investment is

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Definitions:

Fixed Costs

Fixed costs refer to expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Total Costs

The aggregate amount of money spent on producing goods or services, covering both stable and changeable costs.

Economic Profit

The discrepancy between a company's overall income and its combined explicit and implicit expenses.

TR

A common abbreviation for Total Revenue, the total income generated from sales of goods or services.

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