(2) Compute the accounting rate of return for this equipment. X Answer is not complete....
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(2) Compute the accounting rate of return for this equipment. X Answer is not complete. Accounting Rate of Return Choose Numerator: 1 Choose Denominator: Accounting Rate of Return Accounting rate of return Annual average investment Annual after-tax net income 66,850 Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $357,000 and to have a seven-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. $380,000 Sales Costs Materials, labor, and overhead (except depreciation) Depreciation on new equipment Selling and administrative expenses Total costs and expenses Pretax income Income taxes (30%) Net income 196,000 51,000 37,500 284,500 95,500 28,650 $ 66,850
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