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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%

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Answer:

Explanation:

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As Jepson paid on the 18th of the same month which is 9 days after purchase , he is entitled to 2% discount on the sales.

<u>Journal Entry</u>

September 8

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5 0
3 years ago
QUESTION THREE
sveta [45]

From the amount of capital that the graduates had, the firms economic depreciation would be $10000

<h3>How to solve for the economic depreciation of the firm</h3>

Original cost of the capital - market value of capital after a year

= $30000 - $20000

= $10000

<h3>How to solve for the partnership costs</h3>

This is the Cost of capital plus cost of office space and cost of interest =  $44,520

<h3>How to solve for economic profit</h3>

Total revenue - partnership cost

100000 - 44520

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Read more on economic depreciation here: brainly.com/question/14552090

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4 0
2 years ago
Suppose that in the fictional country of Albireo the work-eligible population is 180 million, there are 110 million workers in t
maksim [4K]

Answer:

6.36 %

Explanation:

Unemployment means the state of being jobless but actively searching for work.  Unemployed people are part of the labor force.

In the case of Albireo, the work-eligible population is 180 million.

There are 110 million workers in the labor force, and employment level is 103 million. It means that those in the labor force and are not employed are 110 million - 103 million.

The number of unemployed people  = 7 million

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8 0
3 years ago
When a US company purchases and imports wood from Brazil to use to build new houses, within the United States, this purchase inc
Mariana [72]

Answer:

The correct answer is 2. No overall change.

Explanation:

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The aggregate demand that can be accounted for measures exactly the same as GDP. So they are often used as synonyms.

To calculate aggregate demand, the same methods as for calculating GDP can be used, however, aggregate demand is associated with expenditure, so it is calculated by the product method, that is, from the point of view of what society has spent. This calculation takes into account the expenditure of families (private individuals), what has been spent on investment, the cost of public administrations, and finally, net exports, which is the difference between imports and exports In this way, the Aggregate Demand formula would look like this:

DA = C + I + G + (X-M)

3 0
3 years ago
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bazaltina [42]

Answer: $41,520

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= $41,520

4 0
3 years ago
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