In January 2007, the Status Quo Company was formed. Total assets were $544,000, of which $360,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $36,000 per year, and in 2007 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $45,000 per year for each of the last 10 years. Other assets have not changed since 2007.

a. Compute return on assets at year-end for 2007, 2009, 2012, 2014, and 2016. (Use $45,000 in the numerator for each year.) (Input your answers as a percent rounded to 2 decimal places.) 2007__________%

2009__________%

2012__________%

2014__________%

2016__________%

b. To what do you attribute the phenomenon shown in part a?

multiple choice

A. Increase in current assets

B. Increase in market share

C. Annual depreciation charges

c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a? Return on assets will be_______