Question

MC Qu. 99 The following data concerns a proposed equipment... The following data concerns a proposed equipment purchase: Cost $ 158,000 Salvage value $ 5,500 Estimated useful life 4 years Annual net cash flows $ 53,100 Depreciation method Straight-line Ignoring income taxes, the annual net income amount used to calculate the accounting rate of return is:

Answer 1

$14,975

Step-by-step explanation:

Depreciable amount = $158,000 - $5,500 = $152,500

Annual depreciation = $38,125

Annual net income = $53,100 - $38,125 = $14,975.

Therefore, the annual net income amount used to calculate the accounting rate of return is $14,975.