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Santana Rey is considering the purchase of equipment for Business Solutions that would allow the company to add a new product to its computer furniture line. The equipment is expected to cost $255,000 and to have a five-year life and no salvage value. It will be depreciated on a straight-line basis. Business Solutions expects to sell 100 units of the equipment's product each year. The expected annual income related to this equipment follows. Sales $ 383,000 Costs Materials, labor, and overhead (except depreciation) 199,000 Depreciation on new equipment 51,000 Selling and administrative expenses 32,000 Total costs and expenses 282,000 Pretax income 101,000 Income taxes (35%) 35,350 Net income $ 65,650 HOW TO CALCULATE- Accounting Rate of Return for the equipment:

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Accounting Basics, Accounting

Category:- Accounting Basics
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