Spaniel Company Is Considering the Purchase of a New Machine

question 119

Multiple Choice

Spaniel Company is considering the purchase of a new machine for $80,000. The machine would generate an annual cash flow before depreciation and taxes of $28,778 for five years. At the end of five years, the machine would have no salvage value. The company's cost of capital is 12 percent. The company uses straight-line depreciation with no mid-year convention and has a 40 percent tax rate. What is the accounting rate of return on the original investment in the machine approximated to two decimal points?

• A)9.58%
• B)19.17%
• C)15.97%
• D)35.97%

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Definitions:

Current

The flow of electric charge through a conductor or space, measured in amperes.

Phasor Rotation

See phase rotation.

Induction Motor

An electric motor that operates on the principle of induction, where electromagnetic fields are generated to turn the rotor, commonly used in various applications due to its ruggedness and simplicity.

Fourth Harmonic

The fourth harmonic refers to a frequency that is four times the fundamental frequency of a periodic waveform, affecting the system's overall wave shape and performance.