Compute the accounting rate of return on the investment. Show your calculations and round to two decimal places.
Solutions Tool Co. is considering investing in specialized equipment costing $975,000. The equipment has a useful life of five years and a residual value of $75,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are given below:
*Average amount invested = (Amount invested + Residual value) / 2
ARR of Equipment = Average annual operating income / Average amount invested
= $35,000 / $525,000 = 6.67% (Rounded)
You might also like to view...
Which of the following terms does not mean the same as the others?
a. Footing b. Folio c. LP d. Post. Ref.
Which stage of the new-product development process is usually the most expensive for new products?
A. idea screening B. product development C. product launch D. test marketing E. business analysis
One of the benefits of _______________________ in communicating a messages is there are many more touch points where the brand can meet the consumer in real time.
a. Word of Mouth b. Traditional Media c. Guerilla Marketing d. Digital Media
Workplace diversity refers exclusively to the differences between employee characteristics.
Answer the following statement true (T) or false (F)