Purchase Solution

Unadjusted Rated of Return

Not what you're looking for?

Ask Custom Question

Dennis Harper lives in an area of the west that is becoming a popular tourist destination. Dennis is considering starting an off-road jeep tour business by purchasing a four-wheel-drive jeep. Because he plans to work from his house, the jeep is the only asset he will need to purchase. The jeep will cost $20,000 and will have a life of five years and no expected salvage value. Dennis will use the straight line depreciation method. Dennis estimates the net cash flows of the business for the next five years will be as follows:

Year Net Cash Flow
1 $6,000
2 8,000
3 7,000
4 6,000
5 5,000

Question: What is the unadjusted rate of return of this investment?

a) 12%
b) 24%
c) 60%
d) 64%

Purchase this Solution
Solution Summary

The unadjusted rate of return is examined for Dennis Harper.

Solution Preview

The unadjusted rate of return is a profitability measurement tool used to determine how much revenue an investment will generate minus expenses. It is calculated as ...

Purchase this Solution
Free BrainMass Quizzes
IPOs

This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)

Marketing Management Philosophies Quiz

A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Writing Business Plans

This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.

View More Free Quizzes
Related BrainMass Solutions

  • Questions Regarding Corporate Investment Analysis

    Sincerely, Anna Liza Gaspar ANSWERS Ch 1-12 First, nominal rate is the rate of return that is unadjusted for inflation. Second, real rate is the rate of return which takes into account inflation rate.

  • Payback period and rate of return

    As part of your analysis, compute: 1. The payback period 2. The unadjusted rate of return 3. The net present value 4.

  • Payback period and Net Present value

    This explains the computation of payback period, the unadjusted rate of return, the net present value, internal rate of return.

  • Lease vs purchase

    Value)/2 13000 Rate of return= 15.00% Recommendation Though the unadjusted rate of return computed on the basis of average investment is 15%, but it is not an appropriate measure as it does not take care of time value

  • Campus Print Shop is thinking of purchasing a new, modern co

    The old copier would be sold for its scrap value of $1,000. Campus requires a return of 14% on its capital investments. 1. As a consultant to Campus, compute: a. The payback period. b. The unadjusted rate of return. c.

  • Capital Investment Decision for Campus Print Shop

    The old copier would be sold for its scrap value of $1,000. Campus requires a return of 14% on its capital investments. As a consultant to Campus, compute: The payback period. The unadjusted rate of return. The net present value.

  • CAPITAL INVESTING

    The company's cost of capital is 12%. You have been asked to advise Yoshika relative to this capital investment decision. As part of your analysis, compute: 1. The payback period. 2. The unadjusted rate of return. 3.

  • Fundamental Managerial Accounting Concepts

    period, and the unadjusted rate of return model.

  • Evaluating Equipment Purchase with Payback Period & Unadjusted Rate

    Income before taxes earned by the ice cream parlor is taxed at an effective rate of 20%. a. Determine the payback period and unadjusted rate of return (use average investment) for each alternative. b.

View More Related Solutions