The Expected Average Rate of Return for a Proposed Investment

Multiple Choice

The expected average rate of return for a proposed investment of $900,000 in a fixed asset, with a useful life of five years, recognition is given to the effect of straight-line depreciation on the investment, no residual value, and an expected total net income of $360,000 for the 5 years, is:

A) 18.5%.
B) 40%.
C) 12.5%.
D) 16%.