Question
The management of Arnold Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of
The management of Arnold Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information the following data is available.
YearIncome from
Operations
Net Cash
Flow1$100,000$180,000240,000120,000320,000100,000410,00090,000510,00090,000
The accounting rate of return for this investment is:
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