Final answer:
The average investment for the given scenario, using straight-line depreciation and no residual value over four years, is calculated by dividing the initial investment of $145,000 by 2, which results in $72,500. Option A is correct.
Step-by-step explanation:
The question asks us to calculate the average investment for a proposed investment scenario. In this case, the scenario involves a straight-line depreciation method with no residual value, meaning that the investment will depreciate evenly over its useful life.
To find the average investment, we'll take the initial investment amount ($145,000) and recognize that at the end of four years, due to the straight-line depreciation, the book value of the asset will be $0.
Therefore, the average book value over the period is simply the initial investment divided by 2, which gives us $145,000 / 2 = $72,500. This represents the mean book value of the asset over its life, thus, the amount of average investment.
Therefore, the correct answer to the question is a. $72,500.