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

question 139

Multiple Choice

A company buys a machine for $76,000 that has an expected life of 6 years and no salvage value.The company uses straight-line depreciation.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:

Auto Manufacturer

A company that specializes in producing and selling automobiles.

Various Stages Of Production

Different phases in the manufacturing process through which a product goes, from raw materials to the final product.

Work In Process

This refers to the portion of inventory that is currently in the process of being produced but is not yet completed.

Work in Progress

Inventory that has begun the manufacturing process but is not yet completed.