The following information was presented by Gamma Manufacturing Company for an asset purchased at the end of the previous year. What is the return on investment (ROI)assuming Gamma (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)10.0%
D)22.2%

Question

Quizplus · Accepted Answer

The ROI is calculated using the formula: ROI = (Net Income / Investment) x 100. Assuming straight-line depreciation, the net book value at the beginning of the year is used. The given ROI of 11.1% matches the calculation based on the provided data.

The Following Information Was Presented by Gamma Manufacturing Company for an Asset