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tekilochka [14]
2 years ago
14

Project A requires a $280,000 initial investment for new machinery with a five-year life and a salvage value of $30,000. The com

pany uses straight-line depreciation. Project A is expected to yield annual net income of $20,000 per year for the next five years. Compute Project A's accounting rate of return. Express your answer as a percentage, rounded to two decimal places.
Business
1 answer:
Volgvan2 years ago
3 0

Answer:

13%

Explanation:

The accounting rate of return (ARR) of an investment project is the accounting  profit (usually before interest and tax) expressed as a percentage of the capital  invested.The essential feature of ARR is that it is based on accounting profits, and the  accounting value of assets employed.

Annual Net income per year=20,000

Capital employed= (Initial cost of machinery+residual value)/2

Capital employed=(280,000+30,000)/2=155,000

Project A Accounting rate of return=Annual net income per year/Capital employed

Project A Accounting rate of return=20,000/155000

                                                          =13%

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Explanation:

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2 years ago
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mestny [16]

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Learn more about supply on:

brainly.com/question/237337

8 0
2 years ago
A business issued a 90-day, 9% note for $70,000 to a creditor on account. Illustrate the effects on the accounts and financial s
SSSSS [86.1K]

Answer:

The computation is shown below:

Explanation:

The journal entries are shown below:

a. Account payable $70,000

           To Notes payable $70,000

(Being the issuance of the note is recorded)

b. Note payable $70,000

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(Being the payment of the note at maturity date including interest is recorded)

The computation is shown below:

= $70,000 × 9% × 90 days ÷ 360 days

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We assume 360 days in a year

Now the effects on the accounts and the financing statement for issuance of the note is shown below:

Balance sheet

Assets          =   Liabilities   + Stockholder equity    Income statement  cash flow statement

No effect = Account payable - $52,000 + No effect  No effect + no effect

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3 years ago
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5 0
3 years ago
Read 2 more answers
Which of the following are integral parts of the managerial process of crafting and executing strategy?
iVinArrow [24]

Answer:

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3 0
3 years ago
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