A Company Is Considering Purchasing a Machine for $21,000

question 93

Multiple Choice

A company is considering purchasing a machine for $21,000.The machine will generate an after-tax net income of $2,000 per year.Annual depreciation expense would be $1,500.The machine has no salvage value.What is the accounting rate of return?

• A)19%
• B)33%
• C)17%
• D)10%
• E)25%

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Definitions:

Feedback Controls

A mechanism in systems and organizations used for adjusting operations and outputs based on differences between actual outcomes and desired outcomes.

Post-Action Controls

The mechanisms put in place to assess the outcomes and effectiveness of actions taken, ensuring alignment with planned objectives or standards.

Ongoing Operations

The continuous activities and processes that are performed by an organization to maintain its business and services.

Feedforward

is a communication process that involves giving future-oriented feedback to help someone adjust their actions before they engage in a specific behavior.