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A company is planning to purchase a machine that will cost $33,600 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 $33,600 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? $103,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (356) Net income $51,000 5,600 43,000 (99,600) $3,400 (1,190) $ 2,210 Multiple Choice 13.15% 50.00% 6.58 Depreulalin Ullacune Selling and administrative expenses Income before taxes Income tax (35) Net income JUUU 43,000 (99,600) $ 3,400 (1,190) $ 2,210 Multiple Choice 13.15% 50.00% 6.58% 33.33% 5.60%
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