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A company is planning to purchase a machine that will cost $33,000 with a six-year life and no salvage value. The company uses straight-line depreciation.
A company is planning to purchase a machine that will cost $33,000 with a six-year life and no salvage value. The company uses straight-line depreciation. 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 Ife appears below. What is the accounting rate of return for this machine? $102,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (401) Net income $50,900 5,500 42,000 (985 400) $ 3.600 (1,440) $ 2,160 Multiple Choice 13.00 6.65% O 50.00% Multiple Choice 13.09%. 6.55%. 50.00% 33.33% 5.50%
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