One division of the Marvin Educational Enterprises has depreciable assets costing $4,000,000. The cash flows from these assets for the past three years have been:Year Cash flows1 $1,200,000 2 $1,400,000 3 $1,620,000 The current (i.e., replacement) costs of these assets were expected to increase 25% each year. Marvin used the straight-line depreciation method and the assets had an estimated useful life of 10 years with no salvage value. For return on investment (ROI) calculations, Marvin uses end-of-year balances.What is the ROI using historical cost and gross book value? Year 1 Year 2 Year 3A.20.0% 25.0% 30.5%B.25.0% 28.0% 32.0%C.18.0% 26.5% 28.0%D.30.0% 35.0% 40.5%
A. Option A
B. Option B
C. Option C
D. Option D
Answer: A
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