The Following Information Was Presented by User-Friendly Industries Company for an Asset

question 62

Multiple Choice

The following information was presented by User-Friendly Industries Company for an asset purchased at the end of the previous year. $$\begin{array} { | l | r | } \hline \text { Original cost of the asset } & \$ 20,000 \\\hline \text { Useful life of the asset } & 10 \text { years } \\\hline \text { Annual operating profit, including depreciation } & \$ 4,000 \\\hline \text { Sabage value } & \$ - 0 - \\\hline\end{array}$$ What is the return on investment (ROI) assuming User-Friendly (a) uses the straight-line method for depreciation and (b) beginning-of-year net book values to compute ROI?

• A) 11.1%.
• B) 20.0%.
• C) 22.2%.
• D) 25.0%.

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Definitions:

Units of Guns

A numerical measure representing the quantity of firearms, often used in discussions or models concerning economics or policy.

Units of Butter

A measure used to quantify butter in terms of recognized units, such as pounds or kilograms, often used in economic models as an example of a commodity.

Maximum Total Number

The highest possible aggregate count or quantity of a particular item or entity within a defined context.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, representing the benefits one misses out on when choosing one option over another.