Question

Assume a machine that has a useful life of only one year costs $2,000. Assume, also, that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. The expected rate of return on this machine is:___________

Answer 1

Answer:

15%

Explanation:

Return on assets (ROA) is a financial ratio that shows how effective the investments in assets has affected the company's income. Mathematically, It is the ratio of net income to total assets where the Net income is the total sales less total expense.

Given that the assets fetches the company an additional income of $2,300 and the cost is $2,000

Net income = $2,300 - $2,000

= $300

Rate of return = $300/$2000

= 0.15

= 15%