Q.
A project will cost ` 40,000. Its stream of earnings before depreciation and taxes during first year through five years is expected to be ` 10,000, ` 12,000, ` 14,000, ` 17,000 and ` 19,000. Assume a 50% tax rate and depreciation on straight line method. The average rate of return of the project is :
[A] ` 15
[B] ` 30
[C] ` 10
[D] ` 50
Answer & Explanation
Answer: ` 30