A 5-year project is estimated to cost $700,000 and have no residual value. If the straight-line depreciation method is used and estimated total income is $231,000, determine the average rate of return giving effect to depreciation on the investment. Round your percentage answer to one decimal place (for example, a value of .1048 rounds to 10.5%). fill in the blank 1 %
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A 5-year project is estimated to cost $700,000 and have no residual value. If the
straight-line depreciation method is used and estimated total income is $231,000, determine the averagerate of return giving effect to depreciation on the investment. Round your percentage answer to one decimal place (for example, a value of .1048 rounds to 10.5%).
fill in the blank 1 %
Depreciation is an accounting method that spreads the cost of a measurable or physical asset over it's own useful life or life expectancy. Depreciation is a measure of how much the value of an asset has depreciated. Businesses can generate revenue while expensing a portion of the asset's cost each year it is in use by depreciating assets. Incorrectly accounting for depreciation can have a massive effect on a company's profits. Long-term assets can be depreciated for tax and accounting reasons as well. Machinery are both costly assets. Rather than realizing the entire cost of an asset in the first year, businesses can use depreciation to disperse out the cost and generate revenue.
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