12)

A company is planning to purchase a machine that will cost $31,200 with a six-year life and 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 asset's life appears below. What is the accounting rate of return for this machine?

Sales$99,000Costs:Manufacturing$50,600Depreciation on machine5,200Selling and administrative expenses39,000(94,800)Income before taxes$4,200Income tax (40%)(1,680)Net income$2,520

Multiple Choice

• 5.20%.
• 33.33%.
• 50.00%.
• 16.15%.
• 8.08%.