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Saturn Ltd is considering investing in a new piece of equipment to improve its manufacturing processes. The machine will cost £115,000 and is expected to be used for five years, after which it is expected to be sold for £25,000. It is estimated that the new machine will result in the following operating profits: Year 1: £15,000 Year 2: £25,000 Year 3: £25,000 Year 4: £20,000 Year 5: £30,000 Calculate the accounting rate of return of the machine. Round off your answer to two decimals. Remember to show all your calculations. Saturn Ltd is considering investing in a new piece of equipment to improve its manufacturing processes. The machine will cost £115,000 and is expected to be used for five years, after which it is expected to be sold for £25,000. It is estimated that the new machine will result in the following operating profits: Year 1: £15,000 Year 2: £25,000 Year 3: £25,000 Year 4: £20,000 Year 5: £30,000 Calculate the accounting rate of return of the machine. Round off your answer to two decimals. Remember to show all your calculations.
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Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
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