Question
Your company is considering purchasing a machine with the following annual year-end accounting investment accounts. Date of purchase Year 1 Year 2 year 3 year
Your company is considering purchasing a machine with the following annual year-end accounting investment accounts. |
| Date of purchase | Year 1 | Year 2 | year 3 | year 4 | |
| Gross investment | $55,000 | $55,000 | $55,000 | $55,000 | $55,000 |
| Less: Accumulated depreciation | 0 | 13,750 | 27,500 | 41,250 | 55,000 |
| Net investment | $55,000 | $41,250 | $27,500 | 13,750 | $ 0 |
The machine generates, on average, $5,300 per year in additional net income. |
What is the average accounting yield of this machine? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
The average accounting yield can be calculated using the following formula Average Accounting Yield ...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Corporate Finance Core Principles and Applications
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Bradford Jordan
5th edition
1259289907, 978-1259289903
