Finance: Investment Appraisal with Accounting Rate of Return (ARR)
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Questions and Answers

What is the total investment outlay for Proposal I?

  • RO 54,000
  • RO 46,000
  • RO 58,000
  • RO 50,000 (correct)
  • What is the salvage value for Proposal II at the end of the project's life?

  • RO 4,000
  • RO 8,000 (correct)
  • RO 6,000
  • RO 10,000
  • If the minimum expected rate of return is 15%, which proposal should be accepted based on the ARR technique?

  • Proposal I (correct)
  • Both proposals
  • Proposal II
  • Neither proposal
  • What is the total pre-tax income generated by the Bluerock Group's high-tech project over the three-year period?

    <p>$6,000</p> Signup and view all the answers

    What is the total depreciation expense for the Bluerock Group's high-tech project over the three-year period?

    <p>$8,000</p> Signup and view all the answers

    If the tax rate is 25%, what is the average accounting return (ARR) for the Bluerock Group's high-tech project?

    <p>15%</p> Signup and view all the answers

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