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Saturn Ltdis considering investing in a new piece of equipment to improve its manufacturing processes. The machine will cost 115,000 and is expected to be
Saturn Ltdis 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 forfive years, after whichit 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.
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