Author Question: Pilot Corporation is considering the purchase of equipment costing $100,000. The equipment will ... (Read 24 times)

yagurl · **on:** Feb 5, 2023

Question 1

Morrow Company is considering a purchase of equipment that costs $70,000. The equipment has a 7-year life and no salvage value. Morrow uses straight-line depreciation. The equipment has a payback period of 4 years. The accounting rate of return is closest to
◦ 3.5%.
◦ 39%.
◦ 25%.
◦ 10.7%.

Question 2

Pilot Corporation is considering the purchase of equipment costing $100,000. The equipment will reduce operating cash expenses by $25,000 each year. The new equipment has a salvage value of $2,000 and will be depreciated over a 10-year useful life. The accounting rate of return is closest to
◦ 35%.
◦ 15.2%.
◦ 25%.
◦ 25.5%.

sin · **Reply #1 on:** Feb 5, 2023

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