1. One division of the Marvin Educational Enterprises has depreciable assets costing $5,700,000. The cash flows from these assets for the past three years have been:

   Year		Cash flows
   1		$	1,767,000
   2		$	2,052,000
   3		$	2,280,000

   The current (i.e., replacement) costs of these assets were expected to increase 15% 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 historical cost and net book value?

   	Year 1			Year 2			Year 3
   A.	45.6	%		57.5	%		71.4	%
   B.	23.3	%		32.5	%		42.9	%
   C.	34.4	%		45.0	%		57.1	%
   D.	31.0	%		36.0	%		40.0	%

   		Option D
   		Option B
   		Option C
   		Option A