Annual Rate of Return-Expected Annual Net Income/Average Investment Average Investment- (Original investment +Value at End of Useful Life) / 2 A company is considering purchasing a machine that costs $280,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual increase in net income is expected to be $27,000. If the machine is purchased, the annual rate of return expected on this machine is 44.3%. 19.3%. 9.6%. 22.1%.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Annual Rate of Return-Expected Annual Net Income/Average Investment
Average Investment- (Original investment +Value at End of Useful Life) / 2
A company is considering purchasing a machine that costs $280,000 and is
estimated to have no salvage value at the end of its 8-year useful life. If the
machine is purchased, annual increase in net income is expected to be
$27,000.
If the machine is purchased, the annual rate of return expected on this
machine is
44.3%.
19.3%.
9.6%.
22.1%.
Transcribed Image Text:Annual Rate of Return-Expected Annual Net Income/Average Investment Average Investment- (Original investment +Value at End of Useful Life) / 2 A company is considering purchasing a machine that costs $280,000 and is estimated to have no salvage value at the end of its 8-year useful life. If the machine is purchased, annual increase in net income is expected to be $27,000. If the machine is purchased, the annual rate of return expected on this machine is 44.3%. 19.3%. 9.6%. 22.1%.
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