Inco Purchased a Computer for $200,000 and This Machine Is

question 105

Multiple Choice

Inco purchased a computer for $200,000 and this machine is expected to generate annual cash flows of $48,271 over the next 5 years.What is the expected rate of return on this investment?

• A)8.84%
• B)26.58%
• C)6.61%
• D)none of these

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Definitions:

Acid-Test Ratio

A financial metric that assesses a company's ability to pay off its current liabilities with its most liquid assets, excluding inventory.

Days' Sales Uncollected

A financial metric that measures the average number of days it takes a company to collect payments after a sale has been made.

Average Accounts Receivable

The mean amount of money owed to a company by its customers over a specific period, indicating the efficiency of credit policies.

Net Sales

The revenue generated from sales transactions after deducting returns, allowances for damaged or missing goods, and discounts provided to customers.