Your firm is considering purchasing a machine with the following annual, end-of-year,book investment accounts.Gross investmentLess: AccumulateddepreciationNet investmentAARYear O$ 71,000 $0%Year 2Year 1Year 3 Year 471,000 $ 71,000 $ 71,000 $ 71,00017,75035,500 53,250 71,000The machine generates, on average, $7,300 per year in additional net income. What isthe average accounting return for this machine? (Do not round intermediatecalculations and enter your answer as a percent rounded to 2 decimal places, e.g.,32.16.)$ 71,000 $ 53,250 $35,500 $ 17,750 $0

Average Accounting Return: It is the ratio of the average after tax profit divided by the average…

Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment AAR Year O Year 1 Year 2 Year 3 Year 4 $ 71,000 $ 71,000 $ 71,000 $ 71,000 $ 71,000 0 17,750 35,500 53,250 71,000 % 71,000 $53,250 $35,500 $ The machine generates, on average, $7,300 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 17,750 $ O

Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Gross investment Less: Accumulated depreciation Net investment AAR Year O Year 1 Year 2 Year 3 Year 4 $ 71,000 $ 71,000 $ 71,000 $ 71,000 $ 71,000 0 17,750 35,500 53,250 71,000 % 71,000 $53,250 $35,500 $ The machine generates, on average, $7,300 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) 17,750 $ O

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

Problem 1PS

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Question

Your firm is considering purchasing a machine with the following annual, end-of-year,
book investment accounts.
Gross investment
Less: Accumulated
depreciation
Net investment
AAR
Year O
$ 71,000 $
0
%
Year 2
Year 1
Year 3 Year 4
71,000 $ 71,000 $ 71,000 $ 71,000
17,750
35,500 53,250 71,000
The machine generates, on average, $7,300 per year in additional net income. What is
the average accounting return for this machine? (Do not round intermediate
calculations and enter your answer as a percent rounded to 2 decimal places, e.g.,
32.16.)
$ 71,000 $ 53,250 $35,500 $ 17,750 $
0

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