A New Manufacturing Machine Is Expected to Cost $286,000, Have

question 37

Multiple Choice

A new manufacturing machine is expected to cost $286,000, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation. Compute the accounting rate of return for the investment.

• A) 22.2%.
• B) 23.4%.
• C) 46.9%.
• D) 12.2%.
• E) 24.5%.

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Definitions:

Deceptive Advertising

Marketing practices that mislead or deceive consumers about the nature, characteristics, or benefits of a product or service.

Federal Trade Commission

A U.S. federal agency tasked with protecting consumers and promoting competition by preventing anticompetitive, deceptive, and unfair business practices.

Telemarketing Sales Rule

A regulation established to protect consumers from deceptive, abusive, or unfair telemarketing practices, including requirements on disclosures and consent.

Mail or Telephone Order Merchandise Rule

A Federal Trade Commission rule that requires sellers who solicit buyers through mail or phone orders to ship items within the time frame promised or, if no time is promised, within 30 days.