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

Year		Cash flows
1		$	1,200,000
2		$	1,400,000
3		$	1,620,000

The current (i.e., replacement) costs of these assets were expected to increase 25% 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 current costs and gross book value?

	Year 1			Year 2			Year 3
A.	14.0	%		18.0	%		22.4	%
B.	13.0	%		14.0	%		14.0	%
C.	12.0	%		10.1	%		9.5	%
D.	14.0	%		12.4	%		10.7	%

Option A

Option B

Option C

Option D