Palmer Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $175,000. The equipment will have an initial cost of $500,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $10,000, what is the accounting rate of return?

35%

Explanation:

Accounting rate of return =Average annual net income*100/Average investment

Average investment = (500000+10000/2) = 255000

Accounting rate of return = 175000*100/255000 = 68.63%

Accounting rate of return = 175000*100/500000 = 35%

The statement: "His tastes, always a trifle luxurious, had taken on an added exuberance from long privation, and the resources of even the Castle Hotel being inadequate for their perfect gratification"

Explanation: Brayton, a rich bachelor that just returned from a long trip around the world, decides to stay at his friend's mansion. The statement: "His tastes, always a trifle luxurious, had taken on an added exuberance from long privation, and the resources of even the Castle Hotel being inadequate for their perfect gratification.", implies that being the wealthy man he is, he would have found it incomplete to stay at any other place that didn't have the luxuries he was used to, even more, when he had been deprived of them for a long time.