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Harvard Manufacturing Company is considering the following investment proposal: Initial investment:     Depreciable assets (straight-line) $48,000   Working capital 4,000 Operations (per year for 4 years):     Cash receipts $30,000   Cash expenditures 17,000 Disinvestment:     Salvage value of equipment $2,000   Recovery of working capital 4,000 The investment's accounting rate of return (rounded to two decimal points) on the original investment is: Select one: A. 3.85 percent B. 5.88 percent C. 10.71 percent D. 8.33 percent

Harvard Manufacturing Company is considering the following investment proposal: Initial investment:     Depreciable assets (straight-line) $48,000   Working capital 4,000 Operations (per year for 4 years):     Cash receipts $30,000   Cash expenditures 17,000 Disinvestment:     Salvage value of equipment $2,000   Recovery of working capital 4,000 The investment's accounting rate of return (rounded to two decimal points) on the original investment is: Select one: A. 3.85 percent B. 5.88 percent C. 10.71 percent D. 8.33 percent

FINANCIAL ACCOUNTING
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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Harvard Manufacturing Company is considering the following investment proposal:

Initial investment:

 

 

Depreciable assets (straight-line)

$48,000

 

Working capital

4,000

Operations (per year for 4 years):

 

 

Cash receipts

$30,000

 

Cash expenditures

17,000

Disinvestment:

 

 

Salvage value of equipment

$2,000

 

Recovery of working capital

4,000


The investment's accounting rate of return (rounded to two decimal points) on the original investment is:

Select one:

A. 3.85 percent

B. 5.88 percent

C. 10.71 percent

D. 8.33 percent

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