-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
$4,500
$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
65,000 per year
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%
19.6% (explain why this is correct)
22.9%
20.6%
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