Question
1. The management of Nixon Corporation is investigating purchasing equipment that would cost $554,000 and have a 7-year life with no salvage value. The equipment
1. The management of Nixon Corporation is investigating purchasing equipment that would cost $554,000 and have a 7-year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $382,000 per year and cash operating expenses by $220,000 per year. (Ignore income taxes.)
Determine the simple rate of return on the investment.
2. In a statement of cash flows, the sale of long-term investment would ordinarily be classified as:
a. An operating activity.
b. A financing activity.
c. An investing activity.
d. A lending activity.
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