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What is the return on investment for paint booth for year

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Problem 1: Matthias Reimann is the paint shop manager for an auto manufacturer. The company bought a new paint booth for $100,000, and it is being depreciated using the straight-line method over 10 years. The cash flow generated from the paint booth is steady, at approximately $25,000 per year. At the end of the second year, the market value of the paint booth, after subtracting the costs to sell it, is estimated to be $80,000. What is the return on investment (ROI) for the paint booth for Year 3, assuming that the net book value method is used and that the opening and ending investment levels are averaged?

a) 15%

b) 20%

c) 21.4%

d) 33%

 

Reference no: EM132772609

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