# Tharpe Painting Company is considering whether to purchase a new spray paint machine that costs ($3,000) .

## Question:

Tharpe Painting Company is considering whether to purchase a new spray paint machine that costs \($3,000\) . The machine is expected to save labor, increasing net income by \($450\) per year. The effective life of the machine is 15 years according to the manufacturer’s estimate.

**Required**

**a.** Determine the unadjusted rate of return based on the average cost of the investment.

**b.** Discuss the shortcomings of using the unadjusted rate of return to evaluate investment opportunities.

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**Related Book For**

## Survey Of Accounting

**ISBN:** 9780077503956

1st Edition

**Authors:** Thomas Edmonds, Philip Olds, Frances McNair, Bor-Yi Tsay