Olsen Inc. Purchased a $580,000 machine to manufacture a specialty tap for electrical equipment. The tap is in high demand and Olsen can sell all that it could manufacture for the next 10 years. To encourage capital investments, the government exempts taxes on profits from new investments in this type of machinery. This legislation most likely will remain in effect in the foreseeable future. The equipment is expected to have 10 years of useful life and no salvage value at the end of this 10-year period. The firm uses straight-line depreciation. The net cash inflow is expected to be $151,000 each year. Olsen uses a discount rate of 12% in evaluating its capital investments. The estimated accounting (book) rate of return (to two decimal places) based on average investment for this proposed investment is:
Did you find an error or inaccuracy? Feel free to write us. Thank you!
Thank you for submitting an example text correction or rephasing. We will review the example in a short time and work on the publish it.
Tips to related online calculators
You need to know the following knowledge to solve this word math problem:
Related math problems and questions:
- Railways 3
Railway Corporation wants to purchase a new machine for $360,000. Management predicts that the machine can produce sales of $220,000 each year for the next 5 years. Expenses are expected to include direct materials, direct labor, and factory overhead (exc
1000$ is invested at 10% compound interest. What factor is the capital multiplied by each year? How much will be there after n=12 years?
- Future value
Suppose you invested $1000 per quarter over a 15 years period. If money earns an anual rate of 6.5% compounded quarterly, how much would be available at the end of the time period? How much is the interest earn?
- Reducing balance method
A company buys an item having a useful life of 10 years for 1,000,000. If the company depreciates the item by the reducing balance method, a. Determine the depreciation for the first year. b. Estimate the depreciation for the second and third years. c. Wh
Apply for a $ 59000 loan, the loan repayment period is 8 years, the interest rate 7%. How much should I pay for every month (or every year if paid yearly). Example is for practise geometric progression and/or periodic payment for an annuity.
- Retirement annuity
How much will it cost to purchase a two-level retirement annuity that will pay $2000 at the end of every month for the first 10 years, and $3000 per month for the next 15 years? Assume that the payment represent a rate of return to the person receiving th
- The machine
The annual depreciation of the machine is 10%. After 8 years, the machine is worth 697 euros. What was the price of this machine at the time of purchase?
The depositor regularly wants to invest the same amount of money in the financial institution at the beginning of the year and wants to save 10,000 euros at the end of the tenth year. What amount should he deposit if the annual interest rate for the annua
- Five years
Nakato Nobuki, a Japanese artist, wants to have $24,000.00 in his savings account at the end of five years. Mr. Nobuki deposits $1,500.00 annually into savings and has a balance of $8,000.00 today. What must the interest rate on the savings account be for
- Present value
A bank loans a family $90,000 at 4.5% annual interest rate to purchase a house. The family agrees to pay the loan off by making monthly payments over a 15 year period. How much should the monthly payment be in order to pay off the debt in 15 years?
- Saving 9
An amount of $ 2000 is invested at an interest of 5% per month. If $ 200 is added at the beginning of each successive month but no withdrawals. Give an expression for the value accumulated after n months. After how many months will the amount has accumula
Calculate how much you earn for $n years $x deposit if the interest rate is $p% and the interest period is a quarter.
- A man 2
A man divides $10,000 into two investments, one at 10% and the other at 30%. Find how much is invested at each rate so that the two investments produce the same income annually.
Tabitha manufactures a product that sells very well. The capacity of her facility is 241,000 units per year. The fixed costs are $122,000 per year, and the variable costs are $11 per unit. The product currently sells for $17. a. What total revenue is requ
- Drilling machine
A manufacturing firm purchased a heavy duty drilling machine. They were given two payment options: Option 1: Make a payment of $46,000 immediately to settle the invoice for the machine. Option 2: Make a payment of $21,500 immediately and the balance of $2
- Owner of the company
The owner of the company with extensive administrative activity wants to sell the obsolete 3 machines at the price of CZK 1000 per 1 machine with a six-month warranty period. If the machine breaks down during this period, the owner will return the employe
Suppose on your 21st birthday you begin making monthly payments of $500 into an account that pays 8% compounded monthly. If you continue the payments until your 51st birthday (30 years), How much money is in your account? How much of it is interesting? Sh