A Company Purchased Assets Costing $200,000 Which Will Be Depreciated

Multiple Choice

A company purchased assets costing $200,000 which will be depreciated over 5-years using straight-line depreciation and no salvage value.The company also purchased land and other assets,which are not depreciable at a cost of $200,000.It is estimated that in 5-years,the value of these assets will be unchanged.Assume that annual cash profits are $80,000 and,for return on investment (ROI) calculations,the company uses end-of-year asset values.If sales each year average $840,000,what will be the asset turnover using gross book value?

A) 3.0.
B) 2.6.
C) 2.1.
D) 1.9.