alicia6390
Jul 14, 2009, 11:11 AM
Company wants to buy a numberically controlled machine to be used in producing specially machined parts for manufacturers of trenching machines. The outlay required is $800,000. The numerically controlled equipment will last 5 years with no expected salvage value. The expected after-tax cash flows associated with the project:
Year Cash Revenues Cash Expenses
1 $1,300,000 $1,000,000
2 $1,300,000 $1,000,000
3 $1,300,000 $1,000,000
4 $1,300,000 $1,000,000
5 $1,300,000 $1,000,000
Compute the numerically controlled equipment’s accounting rate of return as a percent. The accounting rate of return equals the average income divided by the initial investment. I've tried everything and can seem to get the calculation correct.
Year Cash Revenues Cash Expenses
1 $1,300,000 $1,000,000
2 $1,300,000 $1,000,000
3 $1,300,000 $1,000,000
4 $1,300,000 $1,000,000
5 $1,300,000 $1,000,000
Compute the numerically controlled equipment’s accounting rate of return as a percent. The accounting rate of return equals the average income divided by the initial investment. I've tried everything and can seem to get the calculation correct.