Jensen Manufacturing Is Considering Buying an Automated Machine That Costs

question 20

Essay

Jensen Manufacturing is considering buying an automated machine that costs $500,000. It requires working capital of $50,000. Annual cash savings are anticipated to be $206,000 for five years. The company uses straight-line depreciation. The salvage value at the end of five years is expected to be $20,000. The working capital will be recovered at the end of the machine's life.
Required:
Compute the accrual accounting rate of return based on the initial investment.

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Definitions:

Golem Effect

The phenomenon where lower expectations placed upon individuals either by supervisors or the individuals themselves lead to poorer performance.

Gender Prejudices

Preconceived opinions or judgments about individuals based solely on their gender, often leading to discrimination or unequal treatment.

Sexual Harassment

Unwelcome sexual advances, requests for sexual favors, and other verbal or physical harassment of a sexual nature.

International Travel

The act of moving from one country to another for purposes ranging from business, pleasure, or education.