Use the Information Below to Answer the Following Question(s)

question 82

Multiple Choice

Use the information below to answer the following question(s) .Saturn Ltd.wants to automate one of its production processes.The new equipment will cost $180,000.In addition, Saturn will incur installation and testing costs of $5,000 and $8,500 respectively.The expected life of the equipment is 8 years and the salvage value of the equipment is estimated at $18,000.The annual cash savings are estimated at $32,000.The company uses straight-line depreciation and has a required rate of return of 14%.Ignore income taxes.
-What is the accrual accounting rate of return for the investment Saturn Ltd.is considering?

• A)5.2%
• B)16.5%
• C)4.0%
• D)5.9%
• E)11.0%

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Definitions:

Dissolution

The process by which a substance is dissolved by a solvent, resulting in a solution, especially referring to minerals in rocks by water.

Transported

Refers to materials or sediment that have been moved and deposited in a new location by natural processes.

Delta

A landform at the mouth of a river where it splits into several branches, depositing sediments carried from upstream, typically forming a triangular shape.

Deposits Load

Material carried by water, wind, or ice and deposited in a new location, contributing to the formation of sedimentary layers and landforms.