Sawyer & Cecil, Computer Consultants, Is Considering an Investment in Computer

question 163

Multiple Choice

Sawyer & Cecil, Computer Consultants, is considering an investment in computer and network equipment costing $254,000. This equipment would allow them to offer new programming services to clients. The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $60,000. Using the accounting rate of return model, what is the minimum average annual operating income that must be generated from this investment in order to achieve a 12% accounting rate of return?

• A) $7,200
• B) $23,280
• C) $30,480
• D) $31,750

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Definitions:

Malignant Tumor

A term for a cancerous growth that is invasive, capable of spreading to other parts of the body, and potentially life-threatening.

Glandular Organ

An organ that produces and releases chemicals either through ducts or into the bloodstream.

ERT

Estrogen Replacement Therapy; a treatment used to alleviate symptoms of menopause by replenishing estrogen levels.

Energy

The capacity to do work or produce change, present in various forms such as kinetic, potential, thermal, chemical, electric, and more.