Question
Problem 7-5 Average Accounting Return Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Purchase Date Year 1 Year
Problem 7-5 Average Accounting Return
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.
| Purchase Date | Year 1 | Year 2 | Year 3 | Year 4 | |||||||||||||||
| Gross investment | $ | 74,000 | $ | 74,000 | $ | 74,000 | $ | 74,000 | $ | 74,000 | |||||||||
| Less: Accumulated depreciation | 0 | 18,500 | 37,000 | 55,500 | 74,000 | ||||||||||||||
| Net investment | $ | 74,000 | $ | 55,500 | $ | 37,000 | $ | 18,500 | $ | 0 | |||||||||
The machine generates, on average, $8,300 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) AAR %
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Developments In Entrepreneurial Finance And Technology
Authors: David B. Audretsch, Maksim Belitski, Nada Rejeb, Rosa Caiazza
1st Edition
1800884338,1800884346
