Question

An 8-year project is estimated to cost $336,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 14%, determine the average annual income.An 8-year project is estimated to cost $336,000 and have no residual value. If the straight-line depreciation method is used and the average rate of return is 14%, determine the average annual income.

Answer 1

Answer:

23520

Explanation:

Average Investment= Initial cost+ Residual Cost/2

(336000+0)/2=168000

.14*168000=23520 for average annual income

Answer 2

The average annual income over an investment of $336,000 for a period of 8 years and rate of return of 14%, will be $23,520.

What is annual income?

An amount of income, which is earned over an investment for a particular period and a given rate of interest, is known as annual income. Average income is the total income divided by total number of years.

Using the given information, we can estimate that the total investment will be (336,000 + 0)/2, which will amount to $168,000. Now solving further,

$\rm Annual\ Income = Total\ Investment\ x\ \dfrac{Average\ Rate\ of\ Return}{100}\\\\\rm Annual\ Income = 168000\ x\ \dfrac{14}{100}\\\\\rm Annual\ Income = \ 23520$

Hence, the average annual income earned over an investment of such project is aforementioned.

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