Question
Early in January 2013, Tellco, Inc., acquired a new machine and incurred $9,000 of interest, installation, and overhead costs that should have been capitalized but
Early in January 2013, Tellco, Inc., acquired a new machine and incurred $9,000 of interest, installation, and overhead costs that should have been capitalized but were expensed. The company earned net operating income of $110,000 on average total assets of $885,000 for 2013. Assume that the total cost of the new machine will be depreciated over 10 years using the straight-line method.
A.Calculate the ROI for Tellco, Inc., for 2013 =
Calculate the ROI for Tellco, Inc., for 2013, assuming that the $9,000 had been capitalized and depreciated over 10 years using the straight-line method. (Hint: There is an effect on net operating income and average assets.)
ROI=
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