The Following Information Was Presented by Outdoors Manufacturing Company for an Asset

Multiple Choice

The following information was presented by Outdoors Manufacturing Company 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 Outdoors uses (a) the straight-line method for depreciation and (b) beginning-of-year net book values to compute ROI?

A) 11.1%.
B) 20.0%.
C) 10.0%.
D) 22.2%.