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Michaels House of Music wants to purchase TransposeIt, a system that transposes any song in...

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Accounting

Michaels House of Music wants to purchase TransposeIt, a system that transposes any song in its database and prints sheet music in the requested key. This system allows singers to obtain sheet music in keys that are suitable to their vocal range. The software for the system costs $12,000; a new computer and a laser printer costing $4,150 will be needed to run the system. Michael estimates that the system will generate additional annual sales revenue of $23,000 and that annual cash expenditures will be $18,511. Michael uses straight-line depreciation. The software, computer, and printer will have a useful life of 5 years. The system will have a $165 salvage value at the end of its 5-year useful life.

(a)

  • Your Answer
  • Correct Answer

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Your answer is correct.

Calculate the annual net operating income generated by the system.

Annual net operating income $enter the annual net operating income in dollars

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(b)

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Calculate the accounting rate of return of the system.

Accounting rate of return enter the accounting rate of return in percentages %

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