13. A company is planning to purchase a machine that will cost $29,400, have a s

Question

13. A company is planning to purchase a machine that will cost $29,400, have a stx-year life, and be depreclated over a three-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asser's life appears below What is the accounting rate of return for this machine? Costs 4,900 39.000 (96.800) Se and adminlistrative expenses ome before taxes Income tax (40 20 8,080) Net income o 4.90%. 41.22%. 5000% 33.33%. 82.45% Check my work Type here to search

Explanation / Answer

Accounting rate of return =12120/((29400+0)/2)=82.45% Option 5 is correct

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