Using the following information calculate the average return on investment
Purchase Price = $50,000
Life span of new machine = 7 years
Annual earnings before depreciation and tax = 20,000
A . 450%
B . 40%
C . 250%
D . 70%
Answer: B
Explanation:
Average Return on investment = annual net income * 100/ Initial cash investment=(20000*100)/50000= 40%