A Company Is Considering the Purchase of a New Machine

question 58

Multiple Choice

A company is considering the purchase of a new machine for $48,000.Management predicts that the machine can produce sales of $16,000 each year for the next 10 years.Expenses are expected to include direct materials,direct labor,and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year.The company's tax rate is 40%.What is the approximate accounting rate of return for the machine?

• A) 13%.
• B) 17%
• C) 8%
• D) 27%
• E) 10%

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Definitions:

Communication Efficiency

The effectiveness with which information is exchanged within an organization, ensuring that messages are delivered clearly, quickly, and understood as intended.

Perceived Meaning

The interpretation or significance that individuals attribute to something based on their perceptions and experiences.

Minimum Cost

The lowest possible expenditure required to achieve a particular objective or to acquire goods or services.

Resources

Assets or inputs needed for individuals or organizations to function effectively.