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Home Q & A Board Other Fields Homework Help Business Economics
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StormLrd StormLrd
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6 years ago
Jensen Manufacturing Ltd. is considering buying a laser machine which costs $250,000. It requires working capital of $25,000 which will be returned at the end of the project. Annual cash savings are anticipated to be $103,000 for five years. The salvage value at the end of five years is expected to be nil. The company uses straight-line depreciation.

Required:
Determine the accrual accounting rate of return of the investment.
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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#1
6 years ago
[($103,000 - ($250,000/5 years)) ÷ (250,000 + 25,000)] = 19.27%
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