Question
In: Finance
There is an opportunity to expand the existing business by purchasing a new machinery for production....
There is an opportunity to expand the existing business by purchasing a new machinery for production. The machinery costs $500,000 and will be depreciated on straight-line basis to zero over 5 years. If the machinery will increase the operating profit before depreciation by $150,000, $160,000, $170,000, $180,000, and $200,000 over these 5 years. What is the average accounting rate of return for the new machinery? Assume the machine is purchased with all equity and the tax rate is 30%.
Solutions
Expert Solution
The formulas and the inputs used is as follows:
The result is as follows:
jeff jeffy answered 1 year agoRelated Solutions
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