The company is considering a new computer system that has an inital investment of $50,000.

Annual expected incremental revenue is $12,000,

and annual expected incremental operating expense is $1,000.

The expected useful life of the system is 5 years.

There is no salvage value of the system.

The annual accrual accounting rate of return is:

Inncreased i expected avg annual after tax- Operating income/ Net Initial investment:

12,000-1000=11,000/50,000=.22 correct?

calculate before answer.

Answer rating: 100% (QA)

To determine the annual accrual accounting rate of return we need to calculate the average annual af... View the full answer