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Question
A company bought a machine that has an expected life of seven years and no salvage value. Management estimates that this machine will generate annual after-tax net income of $540. If the accounting rate of return is 12%, what was the purchase price of the machine?
A. $4,500
B. $540
C. $31,500
D. $9,000
E. $2,250
Answer
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Related questions
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Periods
12 Percent 1
8929 2
1.6901 3
2.4018 4
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Q:
Assume markup percentage equals desired profit divided by total costs. What is the correct calculation to determine the dollar amount of the markup per unit?
A. Total cost times markup percentage.
B. Total cost per unit times markup percentage per unit.
C. Total cost per unit divided by markup percentage per unit.
D. Markup percentage per unit divided by total cost per unit.
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Q:
Capital budgeting decisions are generally based on:
A. Tentative predictions of future outcomes.
B. Perfect predictions of future outcomes.
C. Results from past outcomes only.
D. Results from current outcomes only.
E. Speculation of interest rates and economic performance only.
Q:
If net present values are used to evaluate two investments that have equal costs and equal total cash flows, the one with more cash flows in the early years has the higher net present value.