Newport Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $251,020. The equipment will have an initial cost of $924,000 and have a 6 year life. There is no salvage value for the equipment. What is the accounting rate of return? Ignore income taxes. Multiple Choice 10.50% 2717% 54.34% 16.67%
Newport Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $251,020. The equipment will have an initial cost of $924,000 and have a 6 year life. There is no salvage value for the equipment. What is the accounting rate of return? Ignore income taxes. Multiple Choice 10.50% 2717% 54.34% 16.67%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Newport Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $251,020. The equipment
will have an initial cost of $924,000 and have a 6 year life. There is no salvage value for the equipment. What is the accounting rate of return? Ignore income taxes.
Multiple Choice
10.50%
27.17%
54.34%
16.67%
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