Problem: What method would be most appropriate for calculating the return on investment? Why? What would be the ROI for the current year?
Fiscal Year, Jan. 1 to Dec. 31 (000 omitted)
Total assets, Jan. 1 $400,000
Total assets, Dec. 31 525,000
Long-term debt, Jan. 1 75,000
Long-term debt Dec.31 96,000
Owner's equity, Jan. 1 278,000
Owner's equity, Dec. 31 303,000
Net income for the year 54,000
Interest expense on long term debt 4,200
Tax rate 30%