An Investment Cost $80,000 with No Salvage Value, a 5

question 47

Multiple Choice

An investment cost $80,000 with no salvage value, a 5 year useful life, and had an expected annual increase in net income of $7,000. Straight line depreciation is used. What is the expected rate of return on this investment?

• A) 2.8%.
• B) 20%.
• C) 8.8%.
• D) 10.4%.

---

Definitions:

GICs

Guaranteed Investment Certificates, fixed-term deposits offered by Canadian banks that guarantee a certain rate of return over a specified period.

Regulatory Approval

The official permission granted by governing bodies for a product or service to be legally sold or distributed.

Pharmaceutical Company

A company involved in the research, development, production, and marketing of drugs or pharmaceuticals.

Sales

The activities involved in selling goods or services in return for money or other compensation.