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Mars 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
Mars 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 $425,000. 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.
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