One division of the Marvin Educational Enterprises has depreciable assets costing $4,400,000. The cash flows from these assets for the past three years have been:

Year		Cash flows
1		$	1,496,000
2		$	1,716,000
3		$	1,870,000

The current (i.e., replacement) costs of these assets were expected to increase 20% each year. Marvin used the straight-line depreciation method; the estimated useful life is 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 net book value?

	Year 1			Year 2			Year 3
A.	48.9	%		61.3	%		75.0	%
B.	26.7	%		36.3	%		46.4	%
C.	37.8	%		48.8	%		60.7	%
D.	34.0	%		39.0	%		42.5	%

Option A

Option B

Option C

Option D