Respuesta :
Answer:
average rate of return = 13 %
Explanation:
given data
equipment cost = $125,000
residual value = $15,000
time = 8 year
Annual Average wage = $28000
Annual operating and energy costs = $5,150
to find out
average rate of return
solution
first we get here depreciation expenses that is here as
Depreciation expense = ( equipment cost - residual value ) ÷ time period .........1
Depreciation expense = [tex]\frac{125000 - 15000}{8}[/tex]
Depreciation expense = $13750
so average annual income will be here as
average annual income = Annual Average wage - Depreciation expense - Annual operating and energy costs ....................2
average annual income = $28,000 - $13750 -$5150
average annual income = $9100
and average investment will be
average investment = [tex]\frac{125000+15000}{2}[/tex]
average investment = $70000
so average rate of return will be here as
average rate of return = [tex]\frac{average\ annual\ income}{average\ investment}[/tex] ..............3
average rate of return = [tex]\frac{9100}{70000}[/tex]
average rate of return = 0.13
average rate of return = 13 %
Answer:
Average rate of return 13%
Explanation:
Given data:
cost of eqipment is $125,000
residual value is $15000
average wage of employee $28,000
energy cost is $5150 per year
Average rate of return [tex]= \frac{Estimated \ Average\ annual\ income}{Average\ investment} \times 100[/tex]
depreciation expense [tex]= \frac{125,000 - 15000}{8} = 13750[/tex]
Average annual income = 28000 - (13750 + 5150) = 9100
average investment [tex]= \frac{125000 + 15000}{2} = 70,000[/tex]
Average rate of return [tex]= \frac{9100}{70,000} \times 100 = 13\%[/tex]
