Tempe Milling is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 5-year useful life:
$$\begin{array} { l r }
\text { Cash revenues } & \$ 50,000 \
\text { Cash expenses } & ( 30,000 ) \
\text { Depreciation expenses (straight-line) } & \underline{ ( 10,000 ) }\
\text { Income provided from equipment } & \underline{\$ 10,000} \
\text { Cost of capital } & 14 \text { percent }
\end{array}$$ The accounting rate of return on initial investment is:

Question

Tempe Milling is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 5-year useful life:
$$\begin{array} { l r } 
\text { Cash revenues } & \$ 50,000 \
\text { Cash expenses } & ( 30,000 ) \
\text { Depreciation expenses (straight-line) } & \underline{ ( 10,000 ) }\
\text { Income provided from equipment } & \underline{\$ 10,000} \
\text { Cost of capital } & 14 \text { percent }
\end{array}$$ The accounting rate of return on initial investment is:

Quizplus · Accepted Answer

The Answer of Tempe Milling is evaluating a proposal to invest in a new piece of equipment costing $50,000 with the following annual cash flows over the equipment's 5-year useful life:
$$\begin{array} { l r } 
\text { Cash revenues } & \$ 50,000 \
\text { Cash expenses } & ( 30,000 ) \
\text { Depreciation expenses (straight-line) } & \underline{ ( 10,000 ) }\
\text { Income provided from equipment } & \underline{\$ 10,000} \
\text { Cost of capital } & 14 \text { percent }
\end{array}$$ The accounting rate of return on initial investment is:

Tempe Milling Is Evaluating a Proposal to Invest in a New