A 5-Year Project Is Estimated to Cost $700,000 and Have

question 57

Essay

A 5-year project is estimated to cost $700,000 and have no residual value.If the straight-line depreciation method is used and estimated total income is $231,000, determine the average rate of return giving effect to depreciation on the investment.

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Definitions:

Cash

Money in the form of coins or banknotes, especially that used to operate a business.

Cash Basis

An accounting method whereby revenues and expenses are recorded when cash is received or paid, rather than when they are incurred.

Accounting

The process of recording, classifying, summarizing, and interpreting financial transactions to provide information that is useful in making business decisions.

Financial Statements

Reports summarizing a company's financial performance and position, including income statement, balance sheet, and cash flow statement.