Compute accounting rate of return on investment

Assignment Help Accounting Basics
Reference no: EM1358124

Mahtomedi Corporation is considering investing in specialized equipment costing $240,000. The equipment has a useful life of five years and a residual value of $20,000. Depreciation is calculated using the straight line method. The expected net cash inflows from the investment are as follows:

Year 1 $60,000

Year 2 90,000

Year 3 110,000

Year 4 40,000

Year 5 25,000

Total cash inflows $325,000

Mahtomedi Corporation's required rate of return on investments is 14%.

What is the accounting rate of return on the investment?

Reference no: EM1358124

Questions Cloud

Altered states of consciousness and schizophrenia : Concerning schizophrenia, describe how altered states of consciousness related to sleep, psychoactive drugs, meditation and hypnosis affect individuals with the disorder.
Cost of common stock with no obligation to stockholders : When measuring the cost of capital, many companies measure the cost of the common stock in the company.
Elucidate what economic factors may influence such behavior : elucidate what economic factors may influence such behavior
Establishing own world-wide satellite radio infrastructure : An entrepreneur is interested in establishing her own world-wide satellite radio infrastructure and has requested your help. Describe and justify the infrastructure that you would develop.
Compute accounting rate of return on investment : Mahtomedi Corporation is considering investing in specialized equipment costing $240,000. The equipment has a useful life of five years and a residual value of $20,000. Depreciation is calculated using the straight line method. The expected net ca..
Accumulate the required amount for retirement : Make a personal retirement plan suppose that you'll retire at the age of 65. The plan should specify the amount of money you need to retire, your longevity, and the monthly amount after retirement so that you and your spouse can lead a comfortable li..
Elucidate how do you expect the demand : Elucidate how do you expect the demand and supply of the good or service to change in the next year. Support your answer.
Changing globalization operations and business strategies : What are some drawbacks and risks to a broad generic business strategy? To a focused strategy - Changing globalization operations and business strategies
What is the speed of the ball the moment : A sphere of mass 2.8 kg is suspended from a cord. A steady horizontal breeze pushes the sphere so that the cord makes an angle of 40° with vertical when at rest.

Reviews

Write a Review

Accounting Basics Questions & Answers

  Depreciation rule-profit margin of business

Is Choi's ruling an ethical violation, or is it a legitimate decision in computing depreciation? How will Choi's new depreciation rule affect the profit margin of her business?

  Market price of schieble bonds

Assuming the market price of the Schieble bonds was known to be $180,000, but the market price of the warrants without the bonds cannot be determined, what are the amounts that should be allocated to the warrants and the bonds?

  General journal entries for beverly crusher

Beverly Crusher is a licensed CPA. During the first month of operations of her business (a sole proprietorship), the following events and transactions occurred.

  Unocrrected misstatements

Uncorrected Misstatement and Performance Materiality. Rivers, CPA is auditing the financial statements of Charger Company, a client for the past five years. During past audits of charger, River has only identified some immaterial misstatements (mo..

  Cumulative effect of accounting change

Suppose a 40% income tax rate. The cumulative effect of this accounting change on beginning retained earnings is

  How would we determine the cost of normal spoilage

How would we find out the cost of normal spoilage so that we can record it in general ledger? How would we fin out the cost of normal spoilage so that we can record it in general ledger

  Cash and accrual accounting

What is the difference between cash and accrual accounting? Which basis of accounting do most companies use, cash or accrual? Why? Which method is approved by GAAP? Why?

  Expense which is related to the company sole

In year 1 Laylor Company has revenues of $100,000, advertising expense of $22,000, depreciation of $15,000-what is expected for last four years. The cost of capital is 10%.

  Defined benefit pension plan

TRM Corporation established a defined benefit pension plan in Year 5. In Year 8 the following information is available. Service cost = $45,000. Interest cost = $60,000.

  Sources of pressure change and influence

Examine the sources of pressure that change and influence the development of GAAP. Determine the sources of pressure that have the greatest impact. Justify your rationale.

  Materials cost accounting-malbim company

The Malbim Company uses a process costing system and adds materials at the beginning. July 1st has 400 units in the beginning inventory (100% materials). The units in beginning inventory (July 1) are only 75% complete on conversion costs-Calculate..

  Devs autoparts company-journal entries

On August 31, 2008, Devs Autoparts Company sold $8,000 worth of parts to Metro Repair Company. The terms of the sale were n/90. Devs receivable policy is to start charging interest of 9% (annually) on all balances over 90 days. Interest is accrued..

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