Smith & Cramer,Computer Repair,is Considering an Investment in Computer and Network

question 22

Multiple Choice

Smith & Cramer,Computer Repair,is considering an investment in computer and network equipment costing $254,000.This equipment would allow them to offer new programming services to clients.The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $60,000.Using the accounting rate of return model,what is the minimum average annual operating income that must be generated from this investment in order to achieve an 11% accounting rate of return?

• A)$6,600
• B)$21,340
• C)$31,750
• D)$27,940

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Definitions:

Appropriate Reagents

Correctly chosen chemicals used to bring about a desired chemical reaction, based on the necessary conditions and outcomes.

Alkene

Unsaturated hydrocarbons containing at least one double bond between carbon atoms, part of the family of olefins.

Enantiomers

Molecules that are mirror images of each other and are non-superimposable.

Asymmetric Carbon Atoms

Atoms of carbon in a molecule that are bonded to four different groups, leading to chirality or optical activity.