The Nifty Fifty Is Considering Opening a New Store at a Start-Up

question 46

Multiple Choice

The Nifty Fifty is considering opening a new store at a start-up cost of $720,000.The initial investment will be depreciated straight-line to zero over the 15-year life of the project.What is the average accounting rate of return?

• A)13.05 percent
• B)13.68 percent
• C)14.01 percent
• D)14.18 percent
• E)14.35 percent

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Definitions:

Negotiability

The characteristic of a document (such as a check or note) signifying that it can be transferred from one person to another in a manner that the recipient takes it free of most defenses that could be raised by the original maker or drawer.

Agent's Signature

The signature of a person who is authorized to act on behalf of another, indicating consent or agreement in a contractual context.

Maker

In the context of contracts, the party who creates or signs a promissory note to pay a certain amount of money to another party.

Drawer

In banking and finance, a drawer refers to the party that writes and signs a check or draft, directing a bank or other financial institution to pay a specified amount to a named payee.