Aqua Shop Is Considering the Purchase of a Used Printing

question 67

Multiple Choice

Aqua Shop is considering the purchase of a used printing press costing $15,000.The printing press would generate a net cash inflow of $6,000 per year for four years.At the end of four years, the press would have no salvage value.The company's cost of capital is 12%.The company uses straight-line depreciation with no mid-year convention.
What is the accounting rate of return on the original investment in the press to the nearest percent, assuming no taxes are paid?

• A) 20 %
• B) 15%
• C) 41%
• D) 9%

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