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 theaccounting rate of return, what is Longmont's average investment?Multiple Choice$26,400.$44,000.O $10,560.$8,800.$22,000.

Answered: $22,000.

Business

Accounting

$22,000.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

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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