Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage value of $30,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,000 per year for the next five years. Compute Project A’s accounting rate of return. Express your answer as a percentage, rounded to two decimal places.
Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage value of $30,000. The company uses straight-line depreciation. Project A is expected to yield annual net income of $20,000 per year for the next five years. Compute Project A’s accounting rate of return. Express your answer as a percentage, rounded to two decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage
value of $30,000. The company uses straight-line
income of $20,000 per year for the next five years. Compute Project A’s accounting
your answer as a percentage, rounded to two decimal places.
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