Net income-how much is accounting rate of return

Assignment Help Financial Accounting

Reference no: EM13777862

Edy's, Inc. wants to purchase of a new ice cream truck with a cost of $51,000. Edy's has a cost of capital of 7.4% and a required rate of return of 10.4%. Its income tax rate is 32%. The acquisition is proposed for January 1, 2011. Edy's expects it can sell the truck for $7,000 at end of its useful life of 4 years. Edy's estimates the following incremental amounts to be generated by the truck:

Year 1 Year 2 Year 3 Year 4 Net income $4,200 $5,600 $6,100 $5,800 Operating cash flows 15,200 16,600 17,100 16,800

How much is accounting rate of return?

A. 14.48% B. 56.64% C. 10.64% D. 18.71% E. Some other answer

Reference no: EM13777862

Questions Cloud

Conversion cost per equivalent unit of the production : The company's ending work in process inventory consists of 8,000 units, 60% complete with respect to materials and 80% complete with respect to conversion costs. If the total cost in this inventory is $200,000 and if the cost for materials is $16 per..

Utilitarian or deontological ethical theory : Each paragraph in the body should start with a topic sentence that clearly identifies the main idea of the paragraph. Each paragraph should have at least four sentences.

Describe the concept of health care ethics : From the scenario, examine the concept of health care ethics, and ascertain the fundamental way in which such concepts apply to procreation-related issues. Speculate on the major ramifications of using moral principles to make decisions concerning..

Case study on umuc haircuts : Have completed all previously assigned readings, particularly those assigned in Weeks 3 and 4 of the class Re-read the "UMUC Haircuts Case Study" and the Stage 1, 2 & 3 assignments, and review the "WalmartExample."Review Instructor feedback from prev..

Net income-how much is accounting rate of return : Edy's, Inc. wants to purchase of a new ice cream truck with a cost of $51,000. Edy's has a cost of capital of 7.4% and a required rate of return of 10.4%. Its income tax rate is 32%. The acquisition is proposed for January 1, 2011.

What are causes of increasing street crimes in our socity : Write a paper about WHAT ARE THE CAUSES OF INCREASING STREET CRIMES IN OUR SOCITY? Create a power point as the means to present your topic to the class. You can also include a brief video clip.

Business situation that presents a legal and ethical issue : A description of a business situation that presents a legal and ethical issue. A description of at least two ethical theories under which the situation will be analyzed

Explain the changes in the supply and demand : You will find two scenarios. Your assignment is to discuss the situation by writing the solutions, and then show the solutions and how you got here in one or more graphs or flowcharts.

What is the materials price variance : Smithy Company produces hockey helmets. The standard cost for each helmet is as follows: Direct material 5.0 lbs at $4.00/lb. $20.00 Direct labor 2.0 hrs @ $16.00/hr. $32.00 Overhead $10.00. During November, 2,000 helmets were produced. 10,600 lbs. o..

User Account

All Pages