The annual profit from a project is forecasted as: Sales 80,000 Labour, materials, and overheads
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The annual profit from a project is forecasted as:
£ £
Sales 80,000 Labour, materials, and overheads 20,000 Depreciation 15,000 35,000 Net profit before tax 45,000 The project requires that a new machine be purchased for £65,000. It will be depreciated using the straight line method over four years to a residual value of £5,000. The project will cease when the machine is sold for £5,000 at the end of the fourth year. Ignoring taxation, what is the accounting rate of return? (No additional working capital is required for this project.)? p-968
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