San Remo Has a $4,000,000 Asset Investment and Is Subject

Multiple Choice

San Remo has a $4,000,000 asset investment and is subject to a 30% income tax rate. Cash inflows are expected to average $600,000 before tax over the next few years; in contrast, average income before tax is anticipated to be $500,000. The company's after-tax accounting rate of return is:

A) 8.75%.
B) 10.50%.
C) 12.50%.
D) 15.00%.
E) None of the other answers are correct.