The Expected Average Rate of Return for a Proposed Investment

question 129

Multiple Choice

The expected average rate of return for a proposed investment of $4,800,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $10,560,000 over the 20 years is

• A) 24%
• B) 22%
• C) 45%
• D) 10%

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Definitions:

Purchase Order

A formal document issued by a buyer to a seller, specifying the products, quantities, and agreed prices for products or services.

Applied Overhead

The estimated overhead cost allocated to particular cost objects, based on a predetermined rate.

Actual Overhead

The real expenses incurred for overhead in a given period, as opposed to budgeted or estimated costs.

Production Jobs

Positions in manufacturing that involve direct involvement in the creation of products, such as assembly line work or machine operation.