Question
Depreciation and Rate of Return Burrell Company purchased a machine for $44,000 on January 2, 2016. The machine has an estimated service life of 5
Depreciation and Rate of Return
Burrell Company purchased a machine for $44,000 on January 2, 2016. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $22,000 each year. The tax rate is 25%.
Required:
Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double-declining-balance depreciation methods. Assume that the machine is the company's only asset.
Straight-line method. Do not round intermediate calculations. Round final answers to two decimal places.
2016________%
2017 ________%
2018 ________%
2019 ________%
2020 ________%
Double-declining-balance depreciation method. Do not round intermediate calculations. Round final answers to two decimal places.
2016 ________%
2017 ________%
2018 ________%
2019 ________%
2020________%
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