WT paper corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine would cost $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual revenues would increase by $430,000 and that annual expenses excluding depreciation would increase by $190,000. Depreciation expense $150,000 per year. Management has a required rate of return of 9%. Compute the accounting rate of return.
WT paper corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine would cost $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual revenues would increase by $430,000 and that annual expenses excluding depreciation would increase by $190,000. Depreciation expense $150,000 per year. Management has a required rate of return of 9%. Compute the accounting rate of return.
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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WT paper corporation is considering adding another machine for the manufacture of corrugated cardboard. The machine would cost $900,000. It would have an estimated life of 6 years and no salvage value. The company estimates that annual revenues would increase by $430,000 and that annual expenses excluding
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