Question

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Exercise 9-18 Payton and Finley Davis run a real estate brokerage firm. They have just moved into a new building and want to add some outdoor digital signage to advertise the firm's services. The sign they are considering has two display areas that can display two different images at the same time and costs $181,200. It is expected to have a useful life of 6 years. In an effort to recoup the cost of the sign, Payton and Finley will rent one display panel to other tenants in the building for $38,500 a year. Electricity to power the sign is expected to be $1,110 per year. Calculate the annual net operating income generated by the new sign. Annual net operating income Calculate the accounting rte of return of the new sign. (Round answer to 2 decimal places, eg, 52.75%.) Accounting rate of return If the sign is successful in generating new business for the firm, how will the accounting rate of return be affected? If the sign is successful, accounting rate of return will

Answer 1

If the sign is able to generate new business, the accounting rate will increase.