Assume that the cost of certain equipment that a business is considering purchasing is $100,000. The equipment will be depreciated over five years, at which point the salvage value is expected to be $8,000. Anticipated after-tax profits (losses) are as follows:

$\begin{array} { c c }
\text { Year } & \text { After-Tax Profits/Losses } \
1 & \$ ( 10,000 ) \
2 & 20,000 \
3 & 25,000 \
4 & 35,000 \
5 & 20,000
\end{array}$
?
Compute the accounting return on the proposed investment.
?

Question

Assume that the cost of certain equipment that a business is considering purchasing is $100,000. The equipment will be depreciated over five years, at which point the salvage value is expected to be $8,000. Anticipated after-tax profits (losses) are as follows:

$\begin{array} { c c } 
\text { Year } & \text { After-Tax Profits/Losses } \
1 & \$ ( 10,000 ) \
2 & 20,000 \
3 & 25,000 \
4 & 35,000 \
5 & 20,000
\end{array}$
?
Compute the accounting return on the proposed investment.
?

Quizplus · Accepted Answer

The Answer of Assume that the cost of certain equipment that a business is considering purchasing is $100,000. The equipment will be depreciated over five years, at which point the salvage value is expected to be $8,000. Anticipated after-tax profits (losses) are as follows:

$\begin{array} { c c } 
\text { Year } & \text { After-Tax Profits/Losses } \
1 & \$ ( 10,000 ) \
2 & 20,000 \
3 & 25,000 \
4 & 35,000 \
5 & 20,000
\end{array}$
?
Compute the accounting return on the proposed investment.
?

Assume That the Cost of Certain Equipment That a Business