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2 . Super Apparel wants to replace an old machine with a new one. The new machine would increase annual revenue by $ 2 0

2. Super Apparel wants to replace an old machine with a new one. The new machine would increase annual revenue by $200,000 and annual operating expenses by $80,000. The new machine would cost $400,000. The estimated useful life of the machine is 10 years with zero salvage value.
i. Compute Accounting Rate of Return (ARR) of the machine using above information.
ii. Should Super Apparel purchase the machine if management wants an Accounting Rate of Return of 19% on all capital investments?
Hint: Use Average Income or Profit after deducting tax, depreciation, and operating expenses.

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