A Company Is Considering the Purchase of a New Machine

question 64

Multiple Choice

A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's after-tax net income, based on a tax rate of 40%, is $2,400. What is the approximate accounting rate of return for the machine?

• A) 13%.
• B) 17%.
• C) 8%.
• D) 27%.
• E) 10%.

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Definitions:

Nonjudgmentally Accepts

An approach to experiences and emotions that involves acknowledging their presence without assessing them as good or bad, often used in mindfulness and therapeutic settings.

Empathic Understanding

Empathic Understanding involves fully comprehending and sympathetically relating to the feelings, thoughts, and experiences of another individual.

Active Listening

An approach to listening that involves giving full attention to the speaker, understanding their message, and responding thoughtfully.

Client-Centered Therapist

A therapist who practices a form of psychotherapy focusing on creating a supportive environment where clients can discover their true selves through self-exploration.