A Company Bought a Machine That Has an Expected Life

question 88

Multiple Choice

A company bought a machine that has an expected life of seven years and no salvage value.Management estimates that this machine will generate annual after-tax net income of $540.If the accounting rate of return is 12%,what was the purchase price of the machine?

• A) $4,500
• B) $540
• C) $31,500
• D) $9,000
• E) $2,250

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Definitions:

Global Markets

The international exchange of goods, services, and finances, characterized by global competition, pricing, and product availability.

Economy

The system of production, distribution, and consumption of goods and services within a particular geographic region.

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The alteration in global or regional climate patterns, attributed significantly to the increased levels of atmospheric carbon dioxide produced by the use of fossil fuels.

Geographic Shifts

Changes in the spatial patterns of phenomena on Earth, including population distributions, industry locations, and climate zones.