A company is planning to purchase a machine that will cost $25,200, have a six-year life, and be depreciated over a six-year period with 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 $ 110,000

Costs:

Manufacturing $ 51,700

Depreciation on machine 4,200

Selling and administrative expenses 50,000 (105,900 )

Income before taxes $ 4,100

Income tax (30%) (1,230 )

Net income $ 2,870

Multiple Choice

33.33%.

4.20%.

50.00%.

22.78%.

11.39%.