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ultiple choice: San Bartolome Company is evaluating a plan to expand its store space due to an expected increase in volume of activities in the coming years. The expansion would cost P350,000. When implemented, the asset would have an annual depreciation of P25,000 and its estimated salvage value at the end of its economic life would be P20,000. The assumed annual increase in sales revenue will P80,000 and cash expenses,P30,000. The company pays income tax at a rate of 30%. Compute the ARR based on initial investment.  • 7.14% • 5.00% • 8.50%

ultiple choice: San Bartolome Company is evaluating a plan to expand its store space due to an expected increase in volume of activities in the coming years. The expansion would cost P350,000. When implemented, the asset would have an annual depreciation of P25,000 and its estimated salvage value at the end of its economic life would be P20,000. The assumed annual increase in sales revenue will P80,000 and cash expenses,P30,000. The company pays income tax at a rate of 30%. Compute the ARR based on initial investment.  • 7.14% • 5.00% • 8.50%

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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San Bartolome Company is evaluating a plan to expand its store space due to an expected increase in volume of activities in the coming years. The expansion would cost P350,000. When implemented, the asset would have an annual depreciation of P25,000 and its estimated salvage value at the end of its economic life would be P20,000. The assumed annual increase in sales revenue will P80,000 and cash expenses,P30,000. The company pays income tax at a rate of 30%. Compute the ARR based on initial investment. 
• 7.14%
• 5.00%
• 8.50%
• 9.46%

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