Ask Question
31 March, 16:06

Jimba's, Inc., has purchased a new donut maker. It cost $20,000 and has an estimated life of 10 years. The following annual donut sales and expenses are projected: Sales $30,000 Expenses: Flour, etc., required in making donuts $15,000 Salaries 8,000 Depreciation 2,000 25,000 Net operating income $5,000 Assume cash flows occur uniformly throughout a year except for the initial investment. The simple rate of return on the new machine is closest to:

+4
Answers (1)
  1. 31 March, 16:21
    0
    Simple rate of return = 25%

    Explanation:

    The simple accounting rate of return is the average annual income expressed as a percentage of the investment. The simple rate of return can be calculated using either of the two formula below:

    Simple rate of return = Annual operating income/Average investment

    Simple rate of return = annual operating income / Initial cost

    Using the second formula, the simple rate rate of return would be

    Rate of return = (5000/20,000) * 100

    = 25%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Jimba's, Inc., has purchased a new donut maker. It cost $20,000 and has an estimated life of 10 years. The following annual donut sales and ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers