$22,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Longmont Corporation is considering the purchase of a machine costing $44,000 with a 5-year useful life and no salvage value. Longmont uses straight-
line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the
accounting rate of return, what is Longmont's average investment?
Multiple Choice
$26,400.
$44,000.
O $10,560.
$8,800.
$22,000.
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