Burn Incorporated purchased a $590, 000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Burn can sell all that it could manufacture for the next 10 years. To encourage capital investments, the government exempts taxes on profits from new investments in this type of machinery. This legislation most likely will remain in effect in the foreseeable future. The equipment is expected to have 10 years of useful life and no salvage value at the end of this 10-year period. The firm uses straight-line depreciation. The net cash inflow is expected to be $138,000 each year. Burn uses a discount rate of 14% in evaluating its capital investments. The estimated accounting (book) rate of return (to two decimal places) based on average investment for this proposed investment is: Multiple Choice 11.51 %. 12.78 %. 24.23 %. 26.78%. 49.68 %.

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Burn Incorporated purchased a $590, 000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Burn can sell all that it could manufacture for the next 10 years. To encourage capital
investments, the government exempts taxes on profits from new investments in this type of machinery. This legislation most likely will remain in effect in the foreseeable future. The equipment is expected to have 10 years of
useful life and no salvage value at the end of this 10-year period. The firm uses straight - line depreciation. The net cash inflow is expected to be $138,000 each year. Burn uses a discount rate of 14% in evaluating its capital
investments. The estimated accounting (book) rate of return (to two decimal places) based on average investment for this proposed investment is: Multiple Choice 11.51%. 12.78 %. 24.23% 26.78%. 49.68%.
Transcribed Image Text:Burn Incorporated purchased a $590, 000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Burn can sell all that it could manufacture for the next 10 years. To encourage capital investments, the government exempts taxes on profits from new investments in this type of machinery. This legislation most likely will remain in effect in the foreseeable future. The equipment is expected to have 10 years of useful life and no salvage value at the end of this 10-year period. The firm uses straight - line depreciation. The net cash inflow is expected to be $138,000 each year. Burn uses a discount rate of 14% in evaluating its capital investments. The estimated accounting (book) rate of return (to two decimal places) based on average investment for this proposed investment is: Multiple Choice 11.51%. 12.78 %. 24.23% 26.78%. 49.68%.
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