Omaha Plating Corporation Is Considering Purchasing a Machine for $1,500,000

question 56

Multiple Choice

Omaha Plating Corporation is considering purchasing a machine for $1,500,000. The machine is expected to generate a constant after-tax income of $100,000 per year for 15 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value.
What is the estimated accounting (book) rate of return (rounded to two decimal places) on the initial investment?

• A) 6.67%.
• B) 10.00%.
• C) 13.33%.
• D) 16.67%.
• E) 23.33%.

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Definitions:

Approach Techniques

Strategies or methods used by salespeople to initiate contact with potential customers, establishing rapport and identifying customer needs.

Participative

A style of management or decision-making that involves input and active participation from all stakeholders or group members.

First Impressions

The initial perception or judgment formed by someone when they first meet another person or encounter something for the first time, often difficult to alter.

Conservative Clothing

Attire that is traditional or modest in style, often preferred in formal or professional settings.