A Company Is Evaluating the Purchase of a Machine for $750,000

question 119

Short Answer

A company is evaluating the purchase of a machine for $750,000 with a nine-year useful life and no salvage value.The company uses straight-line depreciation and it assumes that the annual net cash flow from using the machine will be received uniformly throughout each year.In calculating the accounting rate of return,what is the company's average investment?

---

Definitions:

Segmented Markets

Markets divided into distinct groups of consumers with similar needs or characteristics for targeted marketing strategies.

Factors

Elements or components that contribute to a particular outcome or situation.

Competitive Advantage

A situation or factor that gives a business an advantage or a better standing over its rivals in the industry.

Define

The act of specifying the meaning of a word, phrase, or concept, usually in a clear and precise manner.