Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have an 8 year life. If there is no salvage value of the equipment, what is the accounting rate of return?
Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have an 8 year life. If there is no salvage value of the equipment, what is the accounting rate of return?
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7EA: A mini-mart needs a new freezer and the initial Investment will cost $300,000. Incremental revenues,...
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1.
![Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have an 8
year life. If there is no salvage value of the equipment, what is the accounting rate of return?
Multiple Choice
15.5%
23.0%
46.0%
18.0%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4515bc91-0809-42a9-b9a4-ae265b7b62a4%2Fcb65d72f-21fd-4af4-9d30-5a79604b6009%2Fg6qh13q_processed.png&w=3840&q=75)
Transcribed Image Text:Belmont Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have an 8
year life. If there is no salvage value of the equipment, what is the accounting rate of return?
Multiple Choice
15.5%
23.0%
46.0%
18.0%
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