A Company Purchases a Machine for $1,000,000

question 139

Essay

A company purchases a machine for $1,000,000.The machine has an expected life of nine years and no salvage value.The company anticipates a yearly net income of $60,000 after taxes of 30% to be received uniformly throughout each year.What is the accounting rate of return?

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Definitions:

Annual Contributions

Yearly monetary additions made to retirement savings plans, investment accounts, or other savings vehicles.

Taxable Amount

The portion of income, withdrawals, or distributions subject to tax.

Annuity Payment

Periodic payments received from an annuity contract, usually for retirement income, which can be fixed or variable in amount.

Roth IRA Withdrawals

Withdrawals from a Roth Individual Retirement Account that can be tax-free if certain conditions are met, such as the account being open for at least five years and occurring after the age of 59½.