NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P45,000, a year. Assume that NUBD's effective income tax rate is 40% for all years. What is the accounting rate of return on the initial increase in required investment? *

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line
basis over a five year period with no salvage value. The related cash flow from operations, net
of income taxes, is expected to be P45,000, a year. Assume that NUBD's effective income tax
rate is 40% for all years.
What is the accounting rate of return on the initial increase in required investment? *
Sample format: 11%
Transcribed Image Text:NUBD Co. purchase a machine for P180,000, which will be depreciated on the straight-line basis over a five year period with no salvage value. The related cash flow from operations, net of income taxes, is expected to be P45,000, a year. Assume that NUBD's effective income tax rate is 40% for all years. What is the accounting rate of return on the initial increase in required investment? * Sample format: 11%
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