1. One division of the Marvin Educational Enterprises has depreciable assets costing $4,200,000. The cash flows from these assets for the past three years have been:

   Year		Cash flows
   1		$	1,344,000
   2		$	1,554,000
   3		$	1,743,000

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

   	Year 1			Year 2			Year 3
   A.	26.7	%		25.7	%		24.0	%
   B.	31.3	%		27.0	%		24.1	%
   C.	20.0	%		22.6	%		24.2	%
   D.	16.7	%		15.7	%		14.0	%

   		Option B
   		Option C
   		Option A
   		Option D