A Company Purchases a Machine for $1,000,000

question 139

Essay

A company purchases a machine for $1,000,000.The machine has an expected life of nine years and no salvage value.The company anticipates a yearly net income of $60,000 after taxes of 30% to be received uniformly throughout each year.What is the accounting rate of return?

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Definitions:

Paid-In Capital

Paid-in capital is the amount of money raised by a company in exchange for shares of its stock.

Investments

Investments represent the allocation of resources (such as time, money, or effort) with the expectation of generating an income or profit.

Owners

Individuals or entities that hold the ownership interest in a company, entitling them to the residual profits and assets after liabilities are settled.

Corporation's Charter

A legal document that establishes a corporation, outlining its structure, operations, and objectives, issued by a governmental or other authorized entity.