The following relates to a proposed equipment purchase: Cost $126,900 Salvage value Estimated useful life 3,100 4 years Annual net cash flows $ 45,200 Straight-line Depreciation method The annual average investment amount used to calculate the accounting rate of return is:

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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$40,850
$63,450
$31,725
$61,900
$65,000
Transcribed Image Text:Multiple Choice $40,850 $63,450 $31,725 $61,900 $65,000
The following relates to a proposed equipment purchase:
Cost
$126,900
Salvage value
$ 3,100
Estimated useful life
4 years
Annual net cash flows
$ 45,200
Depreciation method
Straight-line
The annual average investment amount used to calculate the accounting rate of return is:
Multiple Choice
$40,850
$63,450
$31,725
$61,900
Transcribed Image Text:The following relates to a proposed equipment purchase: Cost $126,900 Salvage value $ 3,100 Estimated useful life 4 years Annual net cash flows $ 45,200 Depreciation method Straight-line The annual average investment amount used to calculate the accounting rate of return is: Multiple Choice $40,850 $63,450 $31,725 $61,900
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