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Eva8 [605]
3 years ago
11

Nelson Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an ann

ual increase in cash flow of $170,250. The equipment will have an initial cost of $540,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $195,000, what is the accounting rate of return?
Business
1 answer:
Irina18 [472]3 years ago
3 0

Answer:

the accounting rate of return is 18.75%

Explanation:

The computation of the accounting rate of return is as follows:

But before that following things need to be determined

Depreciation expense is

= ($540,000 - $195,000 )÷ (5 years)

= $69000

The Net income is

=  $170,250 - $69,000

= $101,250

Now the accounting rate of return is

= Net income ÷ Initial investment

= $101,250 ÷ $540,000

= 18.75%

hence, the accounting rate of return is 18.75%

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After a kick-off session and six contentious weekly team meetings, Lola is struggling to align her team around common expectatio
Amiraneli [1.4K]

Answer:

storming

Explanation:

Based on Bruce Tuckman’s theory of team development it seems that Lola's team is currently in the storming phase of the evolution process. This is the second phase in the process, in which individuals are still showing hostility towards one another and have not have not fully assigned or understand each persons role in the team. This leads to resisting control from any authority within the group, and prevents team goals from being achieved.

7 0
3 years ago
A loan is being amortized by means of level monthly payments at an annual effective interest rate of 8%. The amount of principal
suter [353]

Answer:

d) 216

Explanation:

We need to equate the value of 12th payment and t^th payment through the below formula.

=> 1000*(1+8%)^[(t-12)/12] =3700

=> (1.08)^[(t-12)/12] =3.7

=> [(t-12)/12] =17

=> t=216

4 0
3 years ago
According to the law of demand, assuming Ceteris Paribus,
andrey2020 [161]
D I had this on a test and got it right
4 0
3 years ago
Read 2 more answers
Cron Corporation is planning to issue bonds with a face value of $700,000 and a coupon rate of 13 percent. The bonds mature in f
Alexeev081 [22]

Answer:

issue $700,000 in 5 year bonds that pay 13% semiannual coupons (coupon = $45,500)

market interest rate 12%, so bonds will be sold at a premium

1) What was the issue price on January 1 of this year?

issue price = present value of face value + present value of interest payments

  • present value of face value = $700,000 / (1 + 6%)¹⁰ = $390,876
  • present value of annuity = $45,500 x {1 - [1 / (1 + 6%)¹⁰]} / 6% = $334,884

issue price = $390,876 + $334,884 = $725,760

journal entry to record issuance of the bonds:

Dr Cash 725,760

    Cr Bonds payable 700,000

    Cr Premium on bonds payable 25,760

2) What amount of interest expense should be recorded on June 30 and December 31 of this year?

amortization of bond premium June 30 = ($725,760 x 6%) - ($700,000 x 6.5%) = $43,546 - $45,500 = -$1,954

Journal entry June 30th, first coupon payment:

Dr Interest expense 43,546

Dr Premium on bonds payable 1,954

    Cr Cash 45,500

amortization of bond premium December 31 = ($727,714 x 6%) - ($700,000 x 6.5%) = $43,663 - $45,500 = -$1,837

Journal entry December 31st, second coupon payment:

Dr Interest expense 43,663

Dr Premium on bonds payable 1,837

    Cr Cash 45,500

3) What amount of cash should be paid to investors June 30 and December 31 of this year?

$45,500 per coupon payment

4) What is the book value of the bonds on June 30 and December 31 of this year?

Book value on June 30th:

Bonds payable $700,000

Premium on bonds payable $23,806

Book value on December 31st:

Bonds payable $700,000

Premium on bonds payable $21,969

7 0
2 years ago
Machine A has an initial cost of $6,000 with total annual maintenance costs of $750. Machine B has an initial cost of $8,500 wit
ryzh [129]

When the initial cost of Machine A is $6,000 and that of Machine B is $8,500, then both the machines will have the same current value at the end of 10 years.

<h3>What is the meaning of current value?</h3>

The present market value of an asset that prevails in the market is known as the current value of an asset. Using the given conditions, the current value will be the same as computed under,

\rm Cost\ of\ Machine\ A\ + Maintenance\ Cost(Interest\ Rate)= Cost\ of\ Machine\ B\ +Maintenance\ Cost(Interest\ Rate)

Putting the given value and solving further we get,

\rm Current\ Value\ x\ 7.25\ x\ 10\% = \dfrac{2500}{345}\\\\\rm Current Value= 10

Hence, the significance of current value is aforementioned.

Learn more about current value here:

brainly.com/question/8286272

#SPJ1

5 0
1 year ago
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