Question: Computing the rate of return on initial and average investment. An asset costing $100,000 will have an estimated net salvage value of $10,000 at the

Computing the rate of return on initial and average investment. An asset costing $100,000 will have an estimated net salvage value of $10,000 at the end of its 10-year life. It is expected to produce a net cash inflow of $16,000 per year. Straight-line depreciation will be used.

a. Compute the simple rate of return on the beginning investment.

b. Compute the simple rate of return on the average investment.

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