Sawyer & Cecil,Computer Consultants,is Considering an Investment in Computer and Network

question 130

Multiple Choice

Sawyer & Cecil,Computer Consultants,is considering an investment in computer and network equipment costing $254,000.This equipment would allow them to offer new programming services to clients.The equipment will be depreciated on the straight-line basis over an eight- year period with an estimated residual value of $60,000.Using the accounting rate of return model,what is the minimum average annual operating income that must be generated from this investment in order to achieve a 12% accounting rate of return?

• A)$7,200
• B)$23,280
• C)$30,480
• D)$31,750

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Definitions:

Public Service Announcements

Messages broadcasted to inform or educate the public on issues of public interest without commercial intention.

Mandatory Health Warnings

Compulsory advisories placed on products, such as cigarettes, to inform consumers of health risks.

Demand Curve

A graphical representation of the relationship between the price of a good and the quantity demanded for a given period.

Decrease In Demand

A shift in the demand curve to the left, indicating that consumers are willing to purchase less of a product at every price point.