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A company is planning to purchase a machine that will cost $34,200 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 $34,200 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? $ 104,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (308) Net income $51, 100 5,700 44,000 (100, 800) $ 3,200 (960) $ 2,240
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