[The Following Information Applies to the Questions Displayed Below

question 89

Multiple Choice

[The following information applies to the questions displayed below.]
Newport Corporation is considering investing $65,000 in equipment to produce a new product.The useful service life of the equipment is estimated to be ten years,with no salvage value.Straight-line depreciation is used.The company estimates that production and sale of the new product will increase net income by $6,500 per year.
-The expected rate of return on average investment in this equipment is:

• A)15%.
• B)20%.
• C)7.5%.
• D)Some other percentage.

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Definitions:

Poor Earnings

A term used to describe a lower than expected profit or loss reported by a company, indicating underperformance.

Herzberg

Refers to Frederick Herzberg, and emphasizes his work in motivational theory, specifically the differentiation between factors that increase job satisfaction and those that reduce dissatisfaction.

Lower Level Need

Pertains to basic, foundational human needs often described in Maslow's Hierarchy of Needs, such as physiological and safety needs.

Higher Level Needs

Advanced human needs in the hierarchy, typically associated with self-actualization and personal development, beyond basic survival or security needs.