Madrigal Corporation purchased a new machine for $120,000. The machine has an estimated useful life of 10-years with no salvage value and a return on investment (ROI) of 15%. ROI is computed using annual cash flows and straight-line depreciation. What is the annual cash flow using the gross book value method?
A) $12,200.
B) $18,000.
C) $28,200.
D) $30,000.

Question

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The Answer of Madrigal Corporation purchased a new machine for $120,000. The machine has an estimated useful life of 10-years with no salvage value and a return on investment (ROI) of 15%. ROI is computed using annual cash flows and straight-line depreciation. What is the annual cash flow using the gross book value method?
A) $12,200.
B) $18,000.
C) $28,200.
D) $30,000.

Madrigal Corporation Purchased a New Machine for $120,000