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

question 93

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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?


Definitions:

For-Profit Business

A type of enterprise that aims to earn profit for its owners through its operations and services.

Not-for-Profit Organization

An entity that operates for purposes other than generating profit, often focusing on social, educational, or charitable activities.

Private Property

The legal designation of the possession of property by non-governmental legal entities or individuals.

Private Enterprise System

An economic system where private individuals or groups have the right to own property and businesses and operate them for profit with minimal government interference.

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