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Sagot :
Answer:
17.86%
Explanation:
Calculation to determine what The simple rate of return on the investment is closest to:
First step is to calculate the Depreciation
Depreciation = $516,000 ÷ 6years
Depreciation= $86,000
Second step is to calculate Incremental operating income
Incremental operating income = $173,000-$86,000
Incremental operating income=$88,000
Now let determine the simple rate of return on the investment
Using this formula
Simple rate of return = incremental operating income ÷ initial investment
Let plug in the formula
Simple rate of return = $87,000÷$516,000
Simple rate of return =17.86%
Therefore The simple rate of return on the investment is closest to:17.86%
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