A Company Buys a Machine for $60,000 That Has an Expected

question 76

Multiple Choice

A company buys a machine for $60,000 that has an expected life of 9 years and no salvage value. The company anticipates a yearly net income of $2,850 after taxes of 30%, with the cash flows to be received evenly throughout of each year. What is the accounting rate of return?

• A) 2.85%.
• B) 4.75%.
• C) 6.65%.
• D) 9.50%.
• E) 42.75%.

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Definitions:

Least Squares Line

A regression line determined by minimizing the sum of the squares of the differences between observed and predicted values.

Sales

The exchanges of goods or services for money; the action of selling something.

Advertising

The activity or profession of producing advertisements for commercial products or services.

Increase

A rise or growth in quantity, size, strength, or another measure.