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A company is planning to purchase a machine that will cost $28,800 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 $28,800 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? $ 96,000 Sales Costs: Manufacturing Depreciation on machine Selling and administrative expenses Income before taxes Income tax (40%) Net income $50, 300 4,800 36,000 (91,100) $ 4,900 (1,960) $ 2,940 O 4.80%. 10.21%. 50.00%. 33.33%. 20.42%
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