1. The management of Nixon Corporation is investigating purchasing equipment that would cost $554,000 and have a 7-year life with no salvage value. The equipment would allow an expansion of capacity that would increase sales revenues by $382,000 per year and cash operating expenses by $220,000 per year. (Ignore income taxes.)

Determine the simple rate of return on the investment.

2. In a statement of cash flows, the sale of long-term investment would ordinarily be classified as:

a. An operating activity.

b. A financing activity.

c. An investing activity.

d. A lending activity.

Answer rating: 100% (QA)

1 Simple rate of return Annual incremental net operating income Initi... View the full answer