James'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 $10,000; a new computer and a laser printer costing $3,500 will be needed to run the system. James estimates that the system will generate additional annual sales revenue of $23,000 and that annual cash expenditures will be $18,035. James uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $150 salvage value at the end of its 5-year useful life.
James'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 $10,000; a new computer and a laser printer costing $3,500 will be needed to run the system. James estimates that the system will generate additional annual sales revenue of $23,000 and that annual cash expenditures will be $18,035. James uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $150 salvage value at the end of its 5-year useful life.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:(b)
Calculate the accounting rate of return of the system.
Accounting rate of return
%

Transcribed Image Text:James'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 $10,000; a new computer and a laser printer costing $3,500 will be needed to run the system. James estimates that the
system will generate additional annual sales revenue of $23,000 and that annual cash expenditures will be $18,035. James uses
straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $150 salvage
value at the end of its 5-year useful life.
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