When calculating the annual rate of return, the average investment is equal to initial investment divided by life of project. (initial investment plus $0) divided by 2. (initial investment plus salvage value) divided by 2. initial investment divided by 2.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
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Problem 8P
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When calculating the annual rate of return, the average investment is equal to

initial investment divided by life of project.
(initial investment plus $0) divided by 2.
(initial investment plus salvage value) divided by 2.
initial investment divided by 2.
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