ABC Corp. invests $500,000 this year in a three-year project. The investment will have the salvage...
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ABC Corp. invests $500,000 this year in a three-year project. The investment will have the salvage value of $50,000. The performance of the project over the three-year span was as follows: At Year 1, the project had $260,000 in revenues, $35,000 in costs of goods sold, $32,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 19%. At Year 2, the project had $280,000 in revenues, $43,000 in costs of goods sold, $30,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 19%. At Year 3, the project had $290,000 in revenues, $42,000 in costs of goods sold, $33,000 in other operating expenses, and $22,000 in interest payments. The tax rate was 19%. What is this project's average accounting return during the three-year span? HINT: Be sure to set up your depreciation expenses based on the duration of the project. 10.11% 13.56% 12.48% 9.85% Question 15 2.5 pts Same facts as above: what is the average accounting return of this project if the salvage value is $0 (that is, rather than $50,000)? 5.20% 5.72% 6.51% 10.38% ABC Corp. invests $500,000 this year in a three-year project. The investment will have the salvage value of $50,000. The performance of the project over the three-year span was as follows: At Year 1, the project had $260,000 in revenues, $35,000 in costs of goods sold, $32,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 19%. At Year 2, the project had $280,000 in revenues, $43,000 in costs of goods sold, $30,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 19%. At Year 3, the project had $290,000 in revenues, $42,000 in costs of goods sold, $33,000 in other operating expenses, and $22,000 in interest payments. The tax rate was 19%. What is this project's average accounting return during the three-year span? HINT: Be sure to set up your depreciation expenses based on the duration of the project. 10.11% 13.56% 12.48% 9.85% Question 15 2.5 pts Same facts as above: what is the average accounting return of this project if the salvage value is $0 (that is, rather than $50,000)? 5.20% 5.72% 6.51% 10.38%
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To calculate the average accounting return we need to find the average annual accounting profit and ... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324597707
12th edition
Authors: Eugene F. Brigham, Joel F. Houston
Posted Date:
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