The Following Information Was Presented by Shower Wonder Enterprises for an Asset

question 45

Multiple Choice

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

• A) 21.1%.
• B) 20.0%.
• C) 22.2%.
• D) 11.76%.

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