Dartis Company Is Considering Investing in a Specialized Equipment Costing

question 86

Multiple Choice

Dartis Company is considering investing in a specialized equipment costing $600,000. The equipment has a useful life of 5 years and a residual value of $60,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are given below. $$\begin{array} { | r | r | } \hline \text { Year 1 } & \$ 200,000 \\\hline 2 & 150,000 \\\hline 3 & 160,000 \\\hline 4 & 95,000 \\\hline 5 & 75,000 \\\hline & \$ 680,000 \\\hline\end{array}$$ What is the accounting rate of return on the investment?

• A) 7.95%
• B) 8.78%
• C) 8.48%
• D) 9.25%

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Definitions:

Process Theories

Theories that focus on understanding how certain psychological and behavioral processes motivate individuals.

Cognitive Processes

Mental activities involved in acquiring, storing, retrieving, and using information, including perception, memory, thinking, and problem-solving.

Motivation Process

The psychological phenomena that initiate, guide, and maintain goal-oriented behaviors, involving needs, desires, and ambitions in individuals.

Energized

The state of being filled with energy and vitality; physically and mentally revitalized.