B is the correct answer because specialization of labor will result in higher productivity, which means each worker gives higher output each hour
Answer:
The Expected Average Rate of Return for the proposed investment is 30%.
Explanation:
This can be calculated as follows:
Average Investment = (Initial Cost + Residual Value) / 2 = ($5,330,000 + $0) / 2 = $2,665,000
Expected average annual income = Expected total net income / Useful life = $15,990,000 / 20 = $799,500
Expected Average Rate of Return = Estimated Average Annual Income / Average Investment = $799,500 / $2,665,000 = 0.30, or 30%
