Tanner Corporation is considering the acquisition of a new machine that is expected to produce annual savings in cash operating costs of $35,000 before income taxes. The machine costs $110,000, has a useful life of five years, and no salvage value. Tanner uses straight-line depreciation on all assets, is subject to a 20% income tax rate, and has an after-tax hurdle rate of 10%.

Year	FV of $1 at 10%				FV of an ordinary annuity at 10%				PV of $1 at 10%				PV of an ordinary annuity at 10%
1		1.100				1.000				0.909				0.909
2		1.210				2.100				0.826				1.736
3		1.331				3.310				0.751				2.487
4		1.464				4.641				0.683				3.170
5		1.611				6.105				0.621				3.791
6		1.772				7.716				0.564				4.355

Required: A. Compute the machine's accounting rate of return on the initial investment.