The Gamma Inc. is planning to spend P600,000 for a machine that will depreciate on a straight-line basis over a ten-year period with no terminal disposal price. The machine will generate cash flow from operations of P120,000 a year. Ignoring income taxes, what is the accounting rate of return on the net initial investment? (in percentage)
The Gamma Inc. is planning to spend P600,000 for a machine that will depreciate on a straight-line basis over a ten-year period with no terminal disposal price. The machine will generate cash flow from operations of P120,000 a year. Ignoring income taxes, what is the accounting rate of return on the net initial investment? (in percentage)
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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The Gamma Inc. is planning to spend P600,000 for a machine that will
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