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An eight-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 18%. determine the estimated annual net
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An eight-year project is estimated to cost $528,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 18%. determine the estimated annual net income.

User Nihey Takizawa
by
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1 Answer

6 votes

Answer: $48,420‬

Step-by-step explanation:

Average rate of return = Annual Net Income/ Average Investment

Average Investment

= (Beginning value of asset - ending value) / 2

= ( 538,000 + 0)/2

= $269,000

18% = Annual Net Income/269,000

Annual Net Income = 269,000 * 18%

Annual Net Income = $48,420‬

User Mohammed Siddeeq
by
4.3k points
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