George's House of Music wants to purchase Transposelt, a system that transposes any song in its database and prints sheet music in the requested key. This system allows singers to obtain sheet music in keys that are suitable to their vocal range. The software for the system costs $ 11,900; a new computer and a laser printer costing $ 3,100 will be needed to run the system. George estimates that the system will generate additional annual sales revenue of $ 23,300 and that annual cash expenditure will be $ 19,295. George uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $ 225 salvage value at the end of its 5-year useful life. (a) Calculate the annual net operating income generated by the system. (b). Calculate the accounting rate of return of the system.
George's House of Music wants to purchase Transposelt, a system that transposes any song in its database and prints sheet music in the requested key. This system allows singers to obtain sheet music in keys that are suitable to their vocal range. The software for the system costs $ 11,900; a new computer and a laser printer costing $ 3,100 will be needed to run the system. George estimates that the system will generate additional annual sales revenue of $ 23,300 and that annual cash expenditure will be $ 19,295. George uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $ 225 salvage value at the end of its 5-year useful life. (a) Calculate the annual net operating income generated by the system. (b). Calculate the accounting rate of return of the system.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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George's House of Music wants to purchase Transposelt, a system that transposes any song in its database and prints sheet
music in the requested key. This system allows singers to obtain sheet music in keys that are suitable to their vocal range. The
software for the system costs $ 11,900; a new computer and a laser printer costing $ 3,100 will be needed to run the system.
George estimates that the system will generate additional annual sales revenue of $ 23,300 and that annual cash expenditure
will be $ 19,295. George uses straight-line
The system will have a $ 225 salvage value at the end of its 5-year useful life.
(a)
Calculate the annual net operating income generated by the system.
(b).
Calculate the accounting
Transcribed Image Text:George's House of Music wants to purchase Transposelt, a system that transposes any song in its databaseand prints sheet
music in the requested key. This system allows singers to obtain sheet music in keys that are suitable to their vocal range. The
software for the system costs $ 11,900; a new computer and a laser printer costing $ 3.100 will be needed to run the system.
George estimates that the system will generate additional annual sales revenue of $ 23,300 and that annual cash expenditures
will be $ 19,295. George uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years.
The system will have a $ 225 salvage value at the end of its 5-year useful life.
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