Question
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
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 68000 $68,000 $68,000 $68,000 $68,000
Less: Accum deprec 0 17000 34,000 51,000 68000
Net investment $68,000 $51,000 $34,000 17,000 0
The machine generates, on average, $5,500 per year in additional net income.
What is the average accounting return for this machine?
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Financial Management Theory And Practice
Authors: Prasanna Chandra
11th Edition
9355322208, 978-9355322203
