Accounting Rate of Return

Question 1 Saturn Ltd is considering investing in a new piece of equipment to improve its manufacturing processes. The machine will cost $115,000 and is expected to be used for five years, after which it is expected to be sold for $25,000. It is estimated that the new machine will result in the following operating profits: Year 1: $15,000 Year 2: $25,000 Year 3: $25,000 Year 4: $20,000 Year 5: $30,000 Calculate the accounting rate of return of the machine. Round off your answer to two decimals. Remember to show all your calculations. H