1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Otrada [13]
3 years ago
10

Knowledge Check 01 Addison Corporation is considering the purchase of equipment that would increase sales revenues by $250,000 p

er year and cash operating expenses by $100,000 per year. The equipment would cost $400,000 and have a 5-year life with no salvage value. The simple rate of return on the investment is closest to ________. 17.5% 20.0% 25.5% 35.0%
Business
2 answers:
VashaNatasha [74]3 years ago
6 0

Answer:

The answer is 17.5%

Explanation:

Using Accounting Rate of Return (ARR)

ARR= Average Annual Accounting Profit/Average Investment ×100%

ARR = 70,000/400,000× 100% = 17.5%

Average Accounting Profit ?

                                                                $

Sales Revenue                                  250,000

Cash Operating Expenses               <u>(100,000)</u>

Cash flow                                            150,000

Depreciation Charge (See working)<u> 80,000 </u>

Average Accounting Profit              <u> 70,000  </u>

Average Investment cost =$400,000 (Since scrap value is nil)

Working

Depreciation ( Using straight line method)

Annual charge =400,000/5 yrs  = $ 80,000.

ARR is used to measure relative project profitability .It is relative simple to calculate and interpret by the management.

It however ignores time value of money which is one of its greatest limitation.

eduard3 years ago
3 0

Answer:

the simple rate of return on the investment is closest to

15.2%

You might be interested in
Which careers are apart of the Finance career cluster?
elena-s [515]

Answer:

D, most likely

Explanation:

3 0
2 years ago
Read 2 more answers
Answer ASAPWhich of the following is not a part of your credit report?
Sunny_sXe [5.5K]
C hopefully this helps
6 0
3 years ago
A company has two products: standard and deluxe. The company expects to produce 36,375 standard units and 62,240 deluxe units. I
Scrat [10]

Answer:

  1. A1 = $12 A2 = $9.20 A3 = $1.50
  2. Total Overhead for Standart Product              $267.16
  3. Total Overhead for Deluxe Product              $163.48

Explanation:

First we will Calculate the rates:

This is done by adding the two product activity use to get the total cost driver.

Then we divide by the activity cost to get the rate:

\left[\begin{array}{cccc}activity&cost&driver&rate\\1&93,000&7,750&12\\2&92,000&10,000&9,2\\3&8,700&5,800&1,5\\\end{array}\right]

Next we check the overhead per unit:

units/ activity use x rate = overhead for activity

<em>Standart Product Manufacturing Overhead</em>

36,375units /2,500 Use Activity 1   x $12    =  $174.60

36,375units /4,500 Use Activity 2 x $9.20 =   $74.37

36,375units /3,000 Use Activity 3  x $1.50=      $18.19

Total Overhead for Standart Product              $267.16

<em>Deluxe Product Manufacturing Overhead</em>

62,240units /5,250 Use Activity 1   x $12    =   $83,14  

62,240units /5,500 Use Activity 2 x $9.20 =   $60,85

62,240units /2,800 Use Activity 3  x $1.50=      $19,49

Total Overhead for Deluxe Product              $163.48

 

 

7 0
3 years ago
(last word) based on economic theory and research on tuition costs and student borrowing, the best way to reduce tuition costs f
Rina8888 [55]

Answer:

Increase Subsidies for student loans.

Explanation:

By increasing subsidies on student loan, student can acquire higher loans to pay off tuition fees because they are sure of paying back less loan and lesser interest on the loans.

7 0
2 years ago
Your cash t-account has a beginning debit balance of $5,000. New debits are $500 and new credits are three times new debits. Wha
gulaghasi [49]

Answer: 4000

Explanation:

7 0
3 years ago
Other questions:
  • On january 1, 2016, pet friendly stores adopted the retail inventory method. inventory transactions at both cost and retail, and
    5·1 answer
  • Mike is registering his real estate company. He has a license and all of his sales associates and broker associates have license
    9·1 answer
  • How do I get better at Risk the Board Game
    9·1 answer
  • If the price of gasoline rises, when is the price elasticity of demand likely to be the most elastic
    13·1 answer
  • The use of risk quadrants to identify and categorize risk can provide a framework for holistic risk identification. Which quadra
    10·2 answers
  • Everything else equal, an asset's value is:
    11·1 answer
  • Assume that Amazon has a stock-option plan for top management. Each stock option represents the right to purchase a share of Ama
    7·1 answer
  • At the beginning of the year, your company borrows $33,600 by signing a six-year promissory note that states an annual interest
    6·1 answer
  • What is decomposition?Name two types of decomposers and describe their importance.....​
    6·1 answer
  • Sales Transactions and T Accounts Using T accounts for Cash, Accounts Receivable, Sales Tax Payable, Sales, Sales Returns and Al
    5·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!