- +1-530-264-8006
- info@tutorsglobe.com

What is the accounting rate of return

Explain the steps on how to solve the problems given below (MCQ's):

1. Smitty Corp, whose required rate of return is 10%, is considering the purchase of a new piece of equipment. The internal rate of return of the project, which has a life of 8 years, is 12%. The project would have

A.an accounting rate of return greater than 10%.

B.a payback period more than 8 years.

C.a net present value of zero.

D.a net present value greater than zero.

2. How much would you need to deposit now in a savings account that earns 5% interest, compounded annually, in order to withdraw $5,000 at the end of every year for ten years?

A.$47,619

B.$47,500

C.$38,609

D.$50,000

3. Summit Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $159,600. The equipment will have an initial cost of $532,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $14,000, what is the accounting rate of return?

A.30.00%

B.47.11%

C.152.37%

D.19.28%

4.Hiawatha Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $200,000. The equipment will have an initial cost of $900,000 and have a 6 year life. There is no salvage value for the equipment. If the hurdle rate is 8%, what is the approximate net present value? Ignore income taxes.

A.$924,580

B.$300,000

C.$24,580

D.$900,000

5. Albertville Inc produces leather handbags. The production budget for the next four months is: July 5,000 units, August 7,000, September 7,500, October 8,000. Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour) and 2.2 hours of skilled labor (paid $15 per hour). How much will be paid to skilled labor during the three months July - September?

A. $742,500

B.$292,500

C.$4,387,500

D.$643,500

Expected delivery within 24 Hoursrs

18,76,764

Questions

Asked

21,311

Experts

9,67,568

Questions

Answered

Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!

Submit Assignment
## Q : Identify the problems in budgetary control system

Identify the problems that appear to exist in Ferguson & Son Manufacturing Company's budgetary control system and explain how the problems .