Clapton Corporation Is Considering an Investment in New Equipment Costing

question 36

Multiple Choice

Clapton Corporation is considering an investment in new equipment costing $900,000. The equipment will be depreciated on a straight-line basis over a ten-year life and is expected to have a salvage value of $90,000. The equipment is expected to generate net cash flows of $140,000 for each of the first five years and $100,000 for each of the last five years. What is the accounting rate of return associated with the equipment investment?

• A)8.89%
• B)9.23%
• C)8.52%
• D)7.88%

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Definitions:

Imperfectible

The belief that it is impossible to achieve perfection or complete improvement in the human condition.

Functional

In sociology, referring to the aspects of societies or institutions that contribute to their stability and continuity by fulfilling necessary roles.

Practical

Pertains to real-world applications or actions rather than theoretical ideas, emphasizing usability and effectiveness in everyday situations.

Functionalist Theorists

Scholars who analyze society through the lens of function, arguing that each aspect of society is interdependent and contributes to society's functioning as a whole.