Carla Vista Corp. management is considering purchasing a machine that will cost $117,250 and will be...

 

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Carla Vista Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The company's tax rate is 34 percent. Sales Expenses Year 1 (a1) Year 2 Year 3 Year 4 Accounting rate of return $126,450 $179,875 $248,455 $261,440 $271,125 $137,410 $122,488 $143,289 $141,112 $131,556 Carla Vista will accept all projects that provide an accounting rate of return (ARR) of at least 45 percent. Year 5 Calculate accounting rate of return. (Round answer to 1 decimal place, e.g. 15.2%.) % Carla Vista Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The company's tax rate is 34 percent. Sales Expenses Year 1 (a1) Year 2 Year 3 Year 4 Accounting rate of return $126,450 $179,875 $248,455 $261,440 $271,125 $137,410 $122,488 $143,289 $141,112 $131,556 Carla Vista will accept all projects that provide an accounting rate of return (ARR) of at least 45 percent. Year 5 Calculate accounting rate of return. (Round answer to 1 decimal place, e.g. 15.2%.) %

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Calculation of ARR Sales Expenses Depreciation Annual Profit Tota... View the full answer