Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment. What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
Osler Company is considering an investment with the following data: Initial cost $200,000 Annual net cash inflows $25,000 Expected life 10 years Salvage value none Depreciation will be taken on a straight-line basis over the expected life of the investment. What is the accounting rate of return for the investment? a.12.5% b.2.5% c.20% d.25% e.10%
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 5PA: Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated...
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Osler Company is considering an investment with the following data:
Depreciation will be taken on a straight-line basis over the expected life of the investment.
What is the accounting rate ofreturn for the investment ?
Initial cost | $200,000 |
Annual net |
$25,000 |
Expected life | 10 years |
Salvage value | none |
What is the accounting rate of
a.12.5%
b.2.5%
c.20%
d.25%
e.10%
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