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The Crystal Company uses straight-line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated: Estimated useful life: 3 years Initial investment: $400,000 Savings year 1: $160,000 Savings year 2: $150,000 Savings year 3: $90,000 Residual value after 3 yrs $30,000 The accounting rate of return is closest to     37.50%.     15.00%.     0.53%.     2.50%.

The Crystal Company uses straight-line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated: Estimated useful life: 3 years Initial investment: $400,000 Savings year 1: $160,000 Savings year 2: $150,000 Savings year 3: $90,000 Residual value after 3 yrs $30,000 The accounting rate of return is closest to     37.50%.     15.00%.     0.53%.     2.50%.

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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  1. The Crystal Company uses straight-line depreciation and is considering a capital expenditure for which the following relevant cash flow data have been estimated:

    Estimated useful life: 3 years
    Initial investment: $400,000
    Savings year 1: $160,000
    Savings year 2: $150,000
    Savings year 3: $90,000
    Residual value after 3 yrs $30,000

    The accounting rate of return is closest to
       
    37.50%.
       
    15.00%.
       
    0.53%.
       
    2.50%.
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