A company is planning to purchase a machine that will cost $34,800, will have a six-year life, and will have no salvage value. The company expects to sell themachine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accountingrate of return for this machine?SalesCosts:ManufacturingDepreciation on machineSelling and administrative expensesIncomeMultiple ChoiceOOO35.80%5.17%50.00%17.24%.33.33%.E$ 105,000$ 51,2005,80045,000(102,000)$ 3,000< Prev27 of 39Next >80F3aF4F5F65485RDFןדCV6&7TYDIIF7F8F9F10U8900GHJKLBNMP

Step 1: Meaning of Accounting Rate of ReturnAccounting Rate of Return (ARR) is the average annual…

Answered: A company is planning to purchase a…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 3P

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Caduceus Company is considering the purchase of a new piece of factory equipment that will cost $565,000 and will generate $135,000 per year for 5 years. Calculate the IRR for this piece of equipment. For further instructions on internal rate of return In Excel, see Appendix C.
Average rate of returncost savings Maui Fabricators Inc. is considering an investment in equipment that will replace direct labor. The equipment has a cost of 125,000 with a 15,000 residual value and an eight-year life. The equipment will replace one employee who has an average wage of 28,000 per year. In addition, the equipment will have operating and energy costs of 5,150 per year. Determine the average rate of return on the equipment, giving effect to straight-line depreciation on the investment.
A company is planning to purchase a machine that will cost 240,000, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's output of 30,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales Costs: 900,000 Manufacturing 520,000 Depreciation on machine 40,000 Selling and administrative expenses 300,000 (860,000) Income before taxes 40,000 Income tax (25%) (10,000) Net Income 30,000 Choices: 4% 8% 16.7% 25% 12.5%
A company is planning to purchase a machine that will cost $42,000 with a six-year life and no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (30%) Net income Multiple Choice 3.16 years. $60,000 7,000 38,000 $ 114,000 (105,000) 9,000 (2,700) 6,300 $ $
A company is planning to purchase a machine that will cost $39,552, have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? $ 144,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income Multiple Choice 6.18 years. 12 36 veare $ 86,400 4,000 48,000 (138,400) $ 5,600
A company is planning to purchase a machine that will cost $34,800, will have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $ 105,000 Costs: Manufacturing $ 51,200 Depreciation on machine 5,800 Selling and administrative expenses 45,000 (102,000) Income $ 3,000 Question 17Select one: a. 25.29% b. 8.62% c. 51.72% d. 5.17%
A company is planning to purchase a machine that will cost $34,800, will have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $ 105,000 Costs: Manufacturing $ 51,200 Depreciation on machine 5,800 Selling and administrative expenses 45,000 (102,000) Income $ 3,000
A company is planning to purchase a machine that will cost $30,600 with a six-year life and no salvage value. The company uses straight-line depreciation. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $ 98,000 Costs: Manufacturing $50,500 Depreciation on machine Selling and administrative expenses 5,100 38,000 (93,600) Income before taxes $ 4,400 Income tax (30%) (1,320) Net income $ $ 3,080 Multiple Choice 10.07%. 33.33%. 5.10%.
A company is planning to purchase a machine that will cost $70,308, have a six-year life, and will have no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? Sales $ 243,000 Costs: Manufacturing $ 145,800 Depreciation on machine 4,000 Selling and administrative expenses 81,000 (230,800) Income $ 12,200 Multiple Choice 13.02 years. 6.51 years. 1.09 year. 26.04 years. 4.34 years.
J A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year. Management predicts this machine has a 12-year service life and a $120,000 salvage value, and it uses straight-line depreciation. Compute this machine's accounting rate of return. Choose Numerator: Annual average investment ***********y 22.000 1 1 Accounts receivable Annual after-tax net income Annual average investment Annual pre-tax income Average total assets Accounting Rate of Return Choose Denominator: $ =
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