A company is planning to purchase a machine that will cost $27,600 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 life appears below. What is the accounting rate of return for this machine?

Sales				$	94,000
Costs:
Manufacturing	$	50,100
Depreciation on machine		4,600
Selling and administrative expenses		34,000			(88,700	)
Income before taxes				$	5,300
Income tax (35%)					(1,855	)
Net income				$	3,445

Multiple Choice

• 4.60%.

• 33.33%.

• 50.00%.

• 24.96%.

• 12.48%.