Calculate accounting rate of return on average invetsment

Assignment Help Accounting Basics

Reference no: EM131960867

Problem

Premier Printers is considering the purchase of a new printing machine and has minimum required rate of return of 12%. The machine will cost R 625 000 and will have a useful life of 5 years. The machines is expected to have a scrap value of R 25 000. The machine is expected to increase revenue by R 200 000 per yaer but will require maintenance and repairs averaging R 30 000 per year. Depreciation is estimated at R 120 000 per year.

1. Calculate Accounting rate of return on average invetsment.
2. Net Present Value (amounts rounded off to the nearest rand).

Reference no: EM131960867

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