The company is considering a new computer system that has an inital investment of $50,000. Annual expected incremental revenue is $12,000, and annual expected incremental operating expense is $1,000. The expected useful life of the system is 5 years. There is no salvage value of the system. The annual accrual accounting rate of return is: A) 0.02 B) 0.13 C) 0.22 D) none of the above
The company is considering a new computer system that has an inital investment of $50,000. Annual expected incremental revenue is $12,000, and annual expected incremental operating expense is $1,000. The expected useful life of the system is 5 years. There is no salvage value of the system. The annual accrual accounting rate of return is: A) 0.02 B) 0.13 C) 0.22 D) none of the above
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 21EA: Cinemar Productions bought a piece of equipment for $55,898 that will last for 5 years. The...
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![The company is considering a new computer system that has an inital
investment of $50,000. Annual expected incremental revenue is $12,000, and
annual expected incremental operating expense is $1,000. The expected useful
life of the system is 5 years. There is no salvage value of the system. The
annual accrual accounting rate of return is:
A) 0.02
B) 0.13
C) 0.22
D) none of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F49b6872f-8540-4d67-8f44-b13749eac041%2F40339c39-3a8a-4fd6-a57c-a1054b3318cf%2Fpcgq33e_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The company is considering a new computer system that has an inital
investment of $50,000. Annual expected incremental revenue is $12,000, and
annual expected incremental operating expense is $1,000. The expected useful
life of the system is 5 years. There is no salvage value of the system. The
annual accrual accounting rate of return is:
A) 0.02
B) 0.13
C) 0.22
D) none of the above
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