Fast Food, Inc., has purchased a new donut maker. It cost $16,000 and has an estimated life of 10 years. The following annual donut sales and expenses are projected (Ignore income taxes.): Sales $22,000Expenses: Flour, etc., required in making donuts$10,000 Salaries$6,000 Depreciation$1,600 17,600Net operating income $4,400Assume cash flows occur uniformly throughout a year except for the initial investment.The simple rate of return for the new machine is closest to:
A. 27.5%
B. 20%
C. 80.0%
D. 37.5%
Answer: A
You might also like to view...
Martin Company decided to reward its employees with a bonus of 7% on annual net income, after deducting the bonus. The company reported net income of $513,600 before the calculation of the bonus. Prepare the journal entry to accrue employee bonus expense. Omit explanation.
What will be an ideal response?
Which of the following is another name for the channel leader?
A) materials expert B) distribution facilitator C) franchiser D) channel captain E) logistics leader
An objective of activity-based management is to:
a. Eliminate the majority of centralized activities in an organization. b. Reduce or eliminate non-value-added activities incurred to make a product or to provide a service. c. Institute responsibility accounting systems in decentralized organizations. d. All of the above.
Rogue Outfitters Inc. has outstanding $1,000 face value 8% coupon bonds that make semiannual payments, and have 14 years remaining to maturity. If the current price for these bonds is $1,118.74, what is the annualized yield to maturity?
A) 6.68% B) 6.67% C) 6.12% D) 6.00%