Harris Co. is considering a 12-year project that is estimated to cost $900,000 and has no residual value. Harris seeks to earn an average rate of return of 15% on all capital projects. Determine the necessary average annual income (using straight-line depreciation) that must be achieved on this project for it to be acceptable to Harris Co. $fill in the blank 1 per year.
Harris Co. is considering a 12-year project that is estimated to cost $900,000 and has no residual value. Harris seeks to earn an average rate of return of 15% on all capital projects. Determine the necessary average annual income (using straight-line depreciation) that must be achieved on this project for it to be acceptable to Harris Co. $fill in the blank 1 per year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Harris Co. is considering a 12-year project that is estimated to cost $900,000 and has no residual value. Harris seeks to earn an average
$fill in the blank 1 per year.
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Step 1
In this question, we have to calculate the average annual income we have the formula of Average rate of return by making an equation
We have given a 15% average rate of return and initial investment with the help of that we will solve this problem.
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