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| Rex Company is considering an investment in a new plant, which will entail an immediate capital expenditure of $4,000, The plant is to be depreciated on a straight-line basis over 10 years to zero salvage value. Operating income (before depreciation and taxes) is expected to be $800,000 per year over the 10-year life of the plant. The opportunity cost of capital is 14%. Assume that there are no taxes.What is the book (or accounting) rate of return for the investment using the average investment method? What is the book (or accounting) rate of return for the investment using the average investment method? A. 10% B. 20% C. 28% D. 35% |