Question

The amount of the average investment for a proposed investment of $218,000 in a fixed asset with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $26,400 for the four years is:_________.

Answer 1

Answer:

$109,000

Explanation:

Average Investment = ( Initial Investment + Residual Value ) ÷ 2

Therefore,

Average Investment = ( $218,000 + $0) ÷ 2

                                  = $109,000