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BARSIC [14]
3 years ago
15

Gunslinger Company is considering the purchase of pipe cutting equipment. Data on the equipment are as follows: Original Investm

ent $35,000 Net Annual Cash Inflow $8,000 Expected Economic Life in Years 5 The Company uses the straight-line method of depreciation with no mid-year convention. What is the accounting rate of return (ARR) on original investment
Business
1 answer:
NeX [460]3 years ago
4 0

Answer:

4.86%

Explanation:

 The formula to compute the accounting rate of return is shown below:

= Annual net income ÷ original investment

where,

Average  Accounting Income is

= Annual Cash Inflow – Depreciation

= $8,000 - $6,300

= $1,700

The Depreciation is

= ($35000 - $,3500) ÷ 5 years

= $6,300

And, the original investment is $35,000

So, the accounting rate of return is

= $1,700 ÷ $35,000

= 4.86%

We simply applied the above formula

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Answer:

Cash flow is important to government entities because:

As with non-government entities, cash flow is important to government organizations because it is required for the operations of any organization regardless of whether they are government-owned or not, for-profit or not.

The measurable difference in the cash balance of any organization from one period to the next is referred to as Cashflow. No business or entity can continue operations if they keep taking out or spending more cash than they can make.

An administrator can plan for cash flow using a Cash Flow Planner.

This can take the form of a simple excel spread sheet  with one column showing on one side all the monies that one is expecting to come in (Account Receivables) and an adjacent column showing all the monies one is expecting to pay out (Account payables).

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There are specialised apps that help perform this function. An example would be Quickbooks, Planware, Cash Flow Planner, etc.

Cheers!

6 0
3 years ago
What you give up to obtain an item is called your
lara [203]
A) Opportunity cost

because an opportunity cost is for example you have to pick from a xbox one or a ps4. You saw that the ps4 was more scarce for you but you had to give up the xbox one to obtain the ps4. Nothing is free in life!!! You sacrificed the xbox one for the ps4
7 0
3 years ago
A new security system has a price-tag of $8,000, but should save your company $3,600 each year for the next 10 years in reduced
tensa zangetsu [6.8K]

If the required rate of return is 7.2%, no such security shall be purchased.

<h3>What does the required rate of return mean?</h3>

The required rate of return is the expected percentage of returns on investment at the time the investment is made. The required rate of return, in this case, is 7.2%.

The actual returns earned from purchasing the security for $8000 and receiving returns of $3600 are calculated to be around a 3.6% return.

As a result, if the required rate of return on investment is 7.2%, the security should not be purchased.

Read more about the required rate of return here:

brainly.com/question/13987385

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3 0
1 year ago
E14.3 (LO 1) (Entries for Bond Transactions) Presented below are two independent situations. 1. On January 1, 2020, Simon Compan
Savatey [412]

Answer:

1) January 1, 2020

Dr Cash 200,000

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Dr Interest expense 4,500

    Cr Cash 4,500

December 31, fourth coupon payment

Dr Interest expense 4,500

    Cr Interest payable 4,500

2) June 1, 2020

Dr Cash 104,000

     Cr Bonds payable 100,000

     Cr Bond interest payable 4,000

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Dr Interest expense 2,00

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8 0
3 years ago
Equilibrium income is that level of income:______. a. which an economy is capable of producing without generating accelerating i
Phoenix [80]

Answer:

The correct answer is: c. toward which the economy gravitates in the short-run.

Explanation:

In the economic context, the Short Term is a period in which an economy does not have enough time to change its fixed expenses in order to reach new levels of profitability or production, so it must be limited to changes in variable costs. It is worth mentioning that the Short Term is not a defined period of time, but depends on each company, industry or economic variable.

One of the most important bases of the meaning of Short Term is that companies have fixed and variable costs. For example, some common expenses, wages and prices are fixed costs, so they cannot change to freedom to reach a new equilibrium.

3 0
3 years ago
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