Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Year 0 Year 1 Year 2 Year 3 Year 4
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. |
Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | ||||||
Gross investment | $ | 70,000 | $ | 70,000 | $ | 70,000 | $ | 70,000 | $ | 70,000 |
Less: Accumulated depreciation | 0 | 17,500 | 35,000 | 52,500 | 70,000 | |||||
Net investment | $ | 70,000 | $ | 52,500 | $ | 35,000 | $ | 17,500 | $ | 0 |
The machine generates, on average, $5,900 per year in additional net income. What is the average accounting return for this machine?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
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