Walden Industries is considering investing in production-management software that costs $630,000, has $67,000 residual value, and leads to cost savings of $1,650,000 per year over its five-year life. Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return.
A) $697,000
B) $630,000
C) $348,500
D) $67,000
C) $348,500
Average amount invested = (Amount invested + Residual value) / 2
= ($630,000 + $67,000) / 2
= $348,500
You might also like to view...
The distributions of rates of return for Companies AA and BB are given below: State of theProbability of EconomyThis State Occurring AA BB Boom0.2 30% ?10% Normal0.6 10% 5% Recession0.2 ?5% 50% We can conclude from the above information that any rational, risk-averse investor would be better off adding Security AA to a well-diversified portfolio over Security BB.
Answer the following statement true (T) or false (F)
Which of the following represents the overhead applied to a product?
a. Actual Overhead Rate?Estimated Cost Driver Level b. Predetermined Overhead Rate?Actual Cost Driver Level c. Predetermined Overhead Rate?Estimated Cost Driver Level d. Actual Overhead Rate?Actual Cost Driver Level
When a company has visionary leaders who are out to make the world a better place and who are willing to lose money in the short term to seize gains later, they could be categorized as which level?
A. stage 2: engaged B. stage 3: innovative C. stage 4: integrated D. stage 5: transformative
Oshkosh Corporation is a large manufacturer of military vehicles used in Afghanistan. If Oshkosh Corporation workers went out on strike and the President believed that this strike presented a significant threat to the nation's safety, he could do all of the following except:
A. Discharge the strikers and replace them with new workers B. Appoint a board of inquiry to investigate the labor dispute C. Seek a court-ordered injunction preventing the strike D. Impose "cooling off" period to allow the parties time to reach a settlement