Designer Home Company operates a number of home improvement stores in a metropolitan area. Designer Home's...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Designer Home Company operates a number of home improvement stores in a metropolitan area. Designer Home's management estimates that if it invests $260,000 in a new computer system, it can save $64,000 in annual cash operating costs. The system has an expected useful life of eight years and no terminal disposal value. The required rate of return is 12%. Ignore income tax issues and assume all cash flows occur at year-end except for initial investment amounts. Designer Home uses straight-line depreciation. Read the requirements. a. What is the project's accrual accounting rate of return based on net initial investment? First, select the formula labels, then enter the amounts and calculate the accrual accounting rate of return based on net initial investment. (Abbreviations used: AARR = accrual accounting rate of return; avg = average; Ol= operating income. Round your answer two decimal places, X.XX%.) Increase in expected avg annual after-tax Ol Net initial investment = AARR = = % Designer Home Company operates a number of home improvement stores in a metropolitan area. Designer Home's management estimates that if it invests $260,000 in a new computer system, it can save $64,000 in annual cash operating costs. The system has an expected useful life of eight years and no terminal disposal value. The required rate of return is 12%. Ignore income tax issues and assume all cash flows occur at year-end except for initial investment amounts. Designer Home uses straight-line depreciation. Read the requirements. a. What is the project's accrual accounting rate of return based on net initial investment? First, select the formula labels, then enter the amounts and calculate the accrual accounting rate of return based on net initial investment. (Abbreviations used: AARR = accrual accounting rate of return; avg = average; Ol= operating income. Round your answer two decimal places, X.XX%.) Increase in expected avg annual after-tax Ol Net initial investment = AARR = = %
Expert Answer:
Answer rating: 100% (QA)
Accrual Accounting Rate of Return Accounting Income Net Initial Invest... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
Posted Date:
Students also viewed these accounting questions
-
If the firms required rate of return is 12 percent, what is the MIRR for the following project? Year Cash Flow 0 .......... $(105,000) 1 .......... 70,000 2 .......... 50,000
-
A major UK travel company operates a number of call centres in the UK to support its holiday booking activities. The company would like its call operators to gather quantitative information from...
-
A company operates a number of hairdressing establishments which are managed on a franchise arrangement. The franchisor offers support using a PC package which deals with profit budgeting and control...
-
You are analyzing HUE stock. You expect that the dividends over the next three years will be $1.75 in year 1, $1.90 in year 2, $2.00 in year 3 and that HUEs stock price will be $46.32. What is the...
-
A special-purpose government is established to operate parking garages. Will it have to prepare both government-wide and fund statements? Explain.
-
Can you expect to earn extraordinary returns by picking hot stocks?
-
Wisconsin produced 13,260,000 bushels ( \(25.4 \mathrm{~kg}\) per bushel) of oats on 195,000 ac ( \(4046.85 \mathrm{~m}^{2}\) per acre) of land. What is the corresponding yield of oat residue in...
-
In an effort to stop the migration of many of the automobile manufacturing facilities from the Detroit area, Detroits city council is considering passing a statute that would give investment tax...
-
1. If astronauts could travel at v = 0.950c, we on Earth would say it takes 4.42 years to reach Alpha Centauri, which is 4.20 light-years away. The astronauts disagree. a. How much time do the...
-
We will be working with a company called Global Bike Inc., (GBI). Information regarding GBI follows. Company History Global Bike Inc. has a pragmatic design philosophy that comes from its deep roots...
-
A U.S. firm holds an asset in Great Britain and faces the following scenario: State 1 State 2 State 3 Probability 25% 50% 25% Spot rate $ 2.20 / $ 2.00 / $ 1.80 / P* 2,000 2,500 3,000 P $ 4,400 $...
-
Identify the strengths, gaps/limitations in the 2021 Business and ESG Report For the Coca-Cola Company and provide suggestions for creating a stronger approach to demonstrate impact....
-
Duncan, a web developer, recently gave a presentation on online discourse and its ethical implications. The presentation was a huge success, mainly because Duncan maintained the audience's attention...
-
Yakky Yak (YY) sells Hockey Fantasy Sports smartphone apps and is owned 100% by Tom Green. Sales and net earnings for its most recent fiscal year total $3 million and $350,000, respectively. Tom...
-
What is the value chain? what is just-in-time inventory (JIT)? How would I describe Total Quality Management? what is activity based costing? What is theory of constraints? what are balanced...
-
The Sarbanes-Oxley Act added a new requirement to company financial reports regarding responsibility. What was this new requirement? Explain
-
Let A and B be context-free languages. The following is true: O AUB is always context-free None of the above. AUB is never context-free AUB is sometimes, but not always, context-free AUB is always...
-
Akramin just graduated with a Master of Engineering in Manufacturing Engineering and landed a new job in Melaka with a starting salary of RM 4,000 per month. There are a number of things that he...
-
Pendleton Engineering makes cutting tools for metal-working operations. It makes two types of tools: R3, a regular cutting tool, and HP6, a high-precision cutting tool. R3 is manufactured on a...
-
Assume that Pat Borges, CEO of Crango, has mandated a transfer price equal to 200% of full cost. Now he decides to decentralize some management decisions and sends around a memo that states:...
-
A number of terms are listed below: REQUIRED Select the terms from the above list to complete the following sentences. There are several methods of quantitative analysis that a management team can...
-
A piece of red hot iron is suddenly plunged into \(10 \mathrm{~kg}\) of water at \(20^{\circ} \mathrm{C}\). The temperature of water rises to \(55^{\circ} \mathrm{C}\). Calculate the change in...
-
A reverse Carnot engine is used for the heating of a building. The building receives \(209 \mathrm{~kJ} / \mathrm{h}\) of heat at \(20^{\circ} \mathrm{C}\) from a heat pump. The outside air...
-
A hot iron having specific heat \(0.5 \mathrm{~kJ} / \mathrm{kg} \mathrm{K}\), mass \(30 \mathrm{~kg}\) and temperature \(500^{\circ} \mathrm{C}\) is dropped into \(200 \mathrm{~kg}\) of oil of...
Study smarter with the SolutionInn App