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

---

Definitions:

Human Thinking

The process by which humans form thoughts, make decisions, solve problems, and engage in various forms of cognition.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Psychological Tension

A state of mental or emotional strain, often resulting from challenging or demanding circumstances.

Attributions

Explanations that individuals create for the causes of their own and others' behaviors and events.