Determine the accounting rate of return

Assignment Help Financial Accounting
Reference no: EM1314811

Computation of accounting rate of return and depreciation.

Accounting rate of I'9turn, payback, and NPV Busy Beaver Corp. is interested in reviewing its method of evaluating capital expenditure proposals using the accounting rate of return melhoc!. A recent proposal involved a $50,{)(H) investment in a macramé that had an estimated useful life of five years and an estimated salvage value of $10,000. The machine was expected to increase net income (and cash knows) before depreciation expense by $J5,000 per year. The criteria for approving a new investment are that it has a rate of return of 16% and a payback period of three years or less.

Required:

Calculate the accounting rate of return on this investment for the first year. Assume straight-line depreciation. Based on this analysis, would the investment be made? Explain your answer.

Reference no: EM1314811

Questions Cloud

Short run cost and demand data : Compute the marginal cost and marginal revenue of each unit of output and enter these figures in the table.
Difference between gaap used in financial statements : Difference between GAAP used in financial statements and government regulation and Show the difference between GAAP being used in financial statements and government regulations being used in financial statements.
Point out the proportion modeled : Point out the proportion modeled.
How is this different in science : A bug crawls outward from the center of a compact disc spinning at 160 revolutions per minute. The coefficient of static friction between bug's sticky feet and disc surface is 1.10.How far does the bug get from the center before slipping.
Determine the accounting rate of return : Determine the accounting rate of return on this investment for the first year. Assume straight-line depreciation. Based on this analysis, would the investment be made? Explain your answer.
Objective type questions on value of the bond : Objective type questions on value of the Bond and Which of the following statement is CORRECT
What is the value of the subject site : Multiple choice questions related to valuation of real estate property - The buyer was aware of this history prior to consummating the sale. The cost to remove the tanks today is $40,000. What is the value of the subject site?
Find out the magnitude of the normal force : The concrete encloses one steel reinforcing rod with cross-sectional area 1.00cm2. The rod joins two strong end plates. The cross-sectional area of the concrete perpendicular to the rod is 47.5 cm2. Young's modulus for the concrete is 3.00 x 10^10 N/..
Estimating the population parameter and statistic : The probability of obtaining a random sample mean, which is lower than the population mean, is:

Reviews

Write a Review

Financial Accounting Questions & Answers

  Draw on face of financial statements

Show Conclusions you draw on face of financial Statements - Cash flow statement analysis is a very important part of analyzing a company's overall financial health.

  Detremine the maximum cost of capital

If your cost of capital is 18%, should you make the investment? What would be the maximum cost of capital you could afford in order to make the investment?

  Determine the estimated allowance for doubtful accounts

The Draber Company uses the allowance method based on the aging method to determine the estimated allowance for doubtful accounts- Given the above information, determine the estimated allowance for doubtful accounts at the end of the period.

  Effects of transactions on statement of cash flows

Effects of transactions on statement of cash flows - Indicate for each of the following what should be disclosed on a statement of cash flows (indirect method).

  Determine the company''s accounting net income

Computation of net income and Use the following information to calculate the company's accounting net income for the year.

  Effect on the stockholders equity

Describe each transaction effect on the stockholders equity accounts and the total stockholders equity.

  Show analysis of financial statements in terms of ratios

Analysis of Financial Statements in terms of Ratios whether positive or negative.

  Evaluate the sunk cost

Evaluate the total and annualized differential loss or income anticipated from replacing the old machine. Enter all amounts as positive numbers. Evaluate the sunk cost in this situation?

  Analyze weaknesses and financial strengths of the company

Analyzing the weaknesses and financial strengths of the company

  Evaluate the missing amount

Evaluate the missing amount from each of the separate situations and What are the beginning and ending amounts of equity?

  What do you meant by the term liability management

What do you meant by the term liability management?  Discuss the instruments that banks use in liability management.  What are the advantages and potential pitfalls of aggressive use of liability management for commercial banks?

  What could be the expected operating income per week

What could be the expected Operating Income per week? When both machines are working how many of each unit should OSC produce?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd