A Company Buys a Machine for $76,000 That Has an Expected

question 29

Multiple Choice

A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value.The company anticipates a yearly after tax net income of $1,805.What is the accounting rate of return?

• A)2.85%.
• B)4.75%.
• C)6.65%.
• D)9.50%.
• E)42.75%.

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Definitions:

Special Circumstances Doctrine

A legal principle allowing flexibility in sentencing or decision-making due to unique case factors.

Garnishee

A legal process that allows a creditor to seize the assets of a debtor held by a third party.

Annual Rate

The annual rate is the interest percentage that is charged or earned over the course of a year, often used in the contexts of loans, investments, and savings.

Breach of Contract

The inability to meet a condition of any contract, written or spoken, in the absence of a legal justification.