A Company Is Considering Purchasing a Machine for $21,000

question 127

Multiple Choice

A company is considering purchasing a machine for $21,000.The machine will generate an after-tax net income of $2,000 per year.Annual depreciation expense would be $1,500.What is the approximate accounting rate of return?

• A) 19%
• B) 33%
• C) 17%
• D) 10%
• E) 25%

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Definitions:

Deindividuation

Deindividuation is a psychological state occurring in group settings that leads to a reduction in self-awareness and an increase in impulsivity and deviation from typical behavior, often resulting in actions not typically exhibited alone.

Self-discrepancy Theory

Higgins’s theory about the consequences of making actual – ideal and actual – ‘ought’ self-comparisons that reveal self-discrepancies.

Festinger

Leon Festinger was a psychologist known for the theory of cognitive dissonance, which describes the discomfort felt when holding conflicting thoughts or beliefs.

Self-regulation

The process by which individuals control their own thoughts, emotions, and behaviors to pursue long-term goals.