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-A machine with a 5-year life has an initial cost of $20,000 and a $2,000...

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Accounting

-A machine with a 5-year life has an initial cost of $20,000 and a $2,000 salvage value. The annual operating costs per year are $8,000. According to the classical straight line method, the depreciation in year 2 is closest to:

$5,300

$2,800

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$4,500

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$3,600 (explain why this is correct)

-A company produces a gear that is commonly used by several lawnmower manufacturing companies. The base cost of operation (rent, utilities, etc) is $750,000 per year. The cost of manufacturing is $1.35 per gear. If these gears are sold at $7.35 each, how many must be sold each year to break even?

100,000 per year

image

65,000 per year

image

125,000 per year (explain why this is correct)

90,000 per year

-Calculate the rate of return for an investment with the following characteristics.

Initial Cost $20,000
Project Life 10 years
Salvage Value $5,000
Annual Receipts $7,500
Annual Expenses $3,000

24.5%

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19.6% (explain why this is correct)

image

22.9%

20.6%

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