Webster Corp

question 106

Multiple Choice

Webster Corp. is considering producing a new waxing product, Glisten. Research has determined that the company will be able to sell 50,000 units per year at $13. The product will be produced in a section of an existing factory that is currently not in use. To produce Glisten, Webster must buy a machine that costs $380,000. The machine has an expected life of five years and will have an ending residual value of $40,000. Webster will depreciate the machine over five years using the straight-line method. In addition to the cost of the machine, the company will incur incremental manufacturing costs of $535,000. Webster has an income tax rate of 30 percent, and the company's required rate of return is 7 percent. How much is the accounting rate of return?

• A) 8.7%
• B) 48.0%
• C) 15.7%
• D) 19.4%

---

Definitions:

Cognitive Development

The process by which a person perceives, thinks, and gains understanding of their world through the interaction and influence of genetic and learned factors.

Moral Development

The process through which individuals grow in their understanding of morals, ethical behavior, and the reasoning behind their own choices regarding right and wrong.

Postconventional

A stage of moral development where individuals make decisions based on internal principles and values, rather than conforming to societal norms.

Conventional

Referring to ideas, methods, or standards that are widely accepted and practiced within a society or culture.