Question
You are provided with the following details of a proposed investment in a new machine: The factory will cost 500,000 to acquire and install and
You are provided with the following details of a proposed investment in a new machine:
The factory will cost 500,000 to acquire and install and will have a useful life of 20 years.
At the end of the useful life of the machine, it is forecast that it can be sold for spare parts and scrap metal for 20,000.
Depreciation is to be charged on a straight-line basis.
If the machine is acquired, its production activity is forecast to generate revenue of 830,000 per year.
The other annual costs, apart from depreciation, resulting from use of the machine are forecast to be
You are provided with the following details of a proposed investment in a new machine:
The factory will cost 500,000 to acquire and install and will have a useful life of 20 years.
At the end of the useful life of the machine, it is forecast that it can be sold for spare parts and scrap metal for 20,000.
Depreciation is to be charged on a straight-line basis.
If the machine is acquired, its production activity is forecast to generate revenue of 830,000 per year.
The other annual costs, apart from depreciation, resulting from use of the machine are forecast to be as follows:
000 | |
---|---|
Labour | 300.0 |
Production Materials | 300.0 |
Maintenance | 8.0 |
Lubricants and other Supplies | 2.7 |
Electricity Supply | 2.5 |
Ventilation | 3.5 |
Distribution Costs for Products | 104.6 |
Other costs, excluding depreciation of the machine | 2.9 |
What is the forecast annual accounting rate of return from the use of the machine? Enter your answer as a percentage rounded to 2 Decimal Places, without the percentage sign. For example, for 10.768% enter 10.77
Answer:
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