Drew Corp. is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $230,000. The equipment will have an initial cost of $1,000,000 and have a 8 year life. If there is no salvage value of the equipment, what is the accounting rate of return?

Multiple Choice

1- 18.0%

2- 15.5%

3- 46.0%

4- 23.0%