A Company Is Evaluating the Purchase of a Machine for $750,000

question 170

Short Answer

A company is evaluating the purchase of a machine for $750,000 with a six-year useful life and no salvage value. The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is the company's average investment?

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Definitions:

Incidence of Depression

The rate or frequency at which new cases of depression occur in a specified population over a particular period of time.

Life Satisfaction

A measure of an individual's overall contentment with their life, often considered in psychological studies as a component of subjective well-being.

Endocrine System

A network of hormone-secreting glands associated with changes in the individual’s mood, metabolism, and growth. The glands associated specifically with puberty include the pituitary gland, the thyroid gland, the adrenal glands, and the sex glands (gonads).

Hormone-Secreting Glands

Organs or tissues in the body that release hormones directly into the blood or surrounding tissues, influencing various bodily functions.