Mosaic Tile Company Is Considering an Investment in New Equipment

question 108

Multiple Choice

Mosaic Tile Company is considering an investment in new equipment costing $858,000.The equipment will be depreciated on a straight-line basis over a five-year life and is expected to have a residual value of $62,000.The equipment is expected to generate net cash inflows of $1,002,000 in total during the five-year life.What is the accounting rate of return associated with the equipment investment? (Round your answer to two decimal places.)

• A) 12.36%
• B) 8.96%
• C) 45.23%
• D) 9.34%

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