Dylan Company Is Considering an Investment in New Equipment Costing

question 47

Multiple Choice

Dylan Company is considering an investment in new equipment costing $720 000. The equipment will be depreciated on a straight- line basis over a five- year life and is expected to have a salvage value of $45 000. The equipment is expected to generate net cash flows totalling $970 000 during the five years. What is the accounting rate of return associated with the equipment investment?

• A)15.4%
• B)13.9%
• C)30.4%
• D)16.4%

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Definitions:

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Principles or indicators used to inform economic decisions and policies, guiding stakeholders through the complexities of economic systems.

Legislator

An individual who has the power to make, change, or repeal laws within a government.

Secondary Effects

Unintended consequences or outcomes that arise from a primary action or decision.

Unintended Consequences

Outcomes that are not the ones foreseen and intended by a purposeful action, often contrary to the original intentions.