The following information was presented by Shower Wonder Enterprises for an asset purchased at the beginning of the previous year.
$$\begin{array} { l c }
\text { Original cost of the asset } & \$ 20,000 \
\text { Useful life of the asset } & 10 \text { years } \
\text { Annual operating profit, including depreciation } & \$ 4,000 \
\text { Salvage value } &\$ - 0 -
\end{array}$$.
What is the return on investment (ROI) assuming Shower Wonder uses (a) 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%.

Question

The following information was presented by Shower Wonder Enterprises for an asset purchased at the beginning of the previous year.
$$\begin{array} { l c } 
\text { Original cost of the asset } & \$ 20,000 \
\text { Useful life of the asset } & 10 \text { years } \
\text { Annual operating profit, including depreciation } & \$ 4,000 \
\text { Salvage value } &\$ - 0 -
\end{array}$$.
What is the return on investment (ROI) assuming Shower Wonder uses (a) 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%.

Quizplus · Accepted Answer

The Answer of The following information was presented by Shower Wonder Enterprises for an asset purchased at the beginning of the previous year.
$$\begin{array} { l c } 
\text { Original cost of the asset } & \$ 20,000 \
\text { Useful life of the asset } & 10 \text { years } \
\text { Annual operating profit, including depreciation } & \$ 4,000 \
\text { Salvage value } &\$ - 0 -
\end{array}$$.
What is the return on investment (ROI) assuming Shower Wonder uses (a) 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%.

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