Hammer Corporation wants to purchase a new machine for $287,000. Management predicts that the machine will produce sales of $216,000 each year for the next 8 years. Expenses are expected to include direct materials, direct labor, and factory overhead (excluding depreciation) totaling $73,000 per year. The firm uses straight-line depreciation with an assumed residual (salvage) value of $50,000. Hammer's combined income tax rate, t, is 20%.

What is the estimated accounting (book) rate of return (ARR) for the proposed investment, based on average investment? (Round answer to nearest whole number/percentage.)

Multiple Choice

• 42%.

• 44%.

• 47%.

• 54%.

• 64%.