our firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Purchase Date Year 1 Year 2 Year 3 Year 4 Gross investment $ 55,000 $ 55,000 $ 55,000 $ 55,000 $ 55,000 Less: Accumulated depreciation 0 13,750 27,500 41,250 55,000 Net investment $ 55,000 $ 41,250 $ 27,500 $ 13,750 $ 0 The machine generates, on average, $5,300 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) AAR %
our firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Purchase Date Year 1 Year 2 Year 3 Year 4 Gross investment $ 55,000 $ 55,000 $ 55,000 $ 55,000 $ 55,000 Less: Accumulated depreciation 0 13,750 27,500 41,250 55,000 Net investment $ 55,000 $ 41,250 $ 27,500 $ 13,750 $ 0 The machine generates, on average, $5,300 per year in additional net income. What is the average accounting return for this machine? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) AAR %
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter9: Depreciation (deprec)
Section: Chapter Questions
Problem 1R: Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an...
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our firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.
| Purchase Date | Year 1 | Year 2 | Year 3 | Year 4 | |||||||||||||||
| Gross investment | $ | 55,000 | $ | 55,000 | $ | 55,000 | $ | 55,000 | $ | 55,000 | |||||||||
| Less: Accumulated |
0 | 13,750 | 27,500 | 41,250 | 55,000 | ||||||||||||||
| Net investment | $ | 55,000 | $ | 41,250 | $ | 27,500 | $ | 13,750 | $ | 0 | |||||||||
The machine generates, on average, $5,300 per year in additional net income.
What is the average accounting return for this machine? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
AAR %
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