Carmel Corporation Is Considering the Purchase of a Machine Costing

question 151

Multiple Choice

Carmel Corporation is considering the purchase of a machine costing $36,000 with a 6-year useful life and no salvage value.Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year.In calculating the accounting rate of return,what is Carmel's average investment?

• A)$6,000.
• B)$7,000.
• C)$18,000.
• D)$21,000.
• E)$36,000.

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