A company is planning to purchase a machine that will cost $24,000, will have a six-year life, and will have 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		$ 108,000
Costs:
Manufacturing	$ 51,500
Depreciation on machine	4,000
Selling and administrative expenses	48,000	(103,500)
Income		$ 4,500

Multiple Choice

• 37.50%.

• 50.00%.

• 11.25%.

• 4.00%.

• 33.33%