A Company Is Considering the Purchase of a New Machine

question 10

Multiple Choice

A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the approximate Accounting Rate of Return for the machine?

• A) 13%.
• B) 17%.
• C) 8%.
• D) 27%.
• E) 10%.

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Definitions:

Forebrain

The anterior part of the brain, including the cerebrum and structures related to it, responsible for the majority of higher cognitive functions.

Cognitive Functions

Mental processes that involve the acquisition of knowledge, manipulation of information, and reasoning, including perception, memory, and decision-making.

Lashley

Refers to Karl Spencer Lashley, an American psychologist and behaviorist well-known for his research on learning and brain function.

Cerebral Cortex

The outer layer of the brain's cerebral hemispheres, involved in complex brain functions like thought, memory, and consciousness.