Johnson Whole Distributors Is Anticipating Investing in Equipment That Cost

Multiple Choice

Johnson Whole Distributors is anticipating investing in equipment that cost $120,000.The equipment has an 8-year life and no salvage value.Johnson uses straight-line depreciation.The equipment has a payback period of 5 years.The accounting rate of return is closest to

A) 5%.
B) 6.25%.
C) 7.8%.
D) 7.5%.