The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine the best average rate of return. Which machine has the best average rate of return?

	Machine A	Machine B	Machine C
Estimated average annual income	$ 40,000	$ 50,000	$ 75,000
Average investment	300,000	250,000	500,000

a.Machine C

b.Machine B

c.Machines A and B

d.Machine A

Heidi Company is considering the acquisition of a machine that costs $357,000. The machine is expected to have a useful life of six years, a negligible residual value, an annual net cash flow of $105,000, and annual operating income of $75,000. What is the estimated cash payback period for the machine (round to one decimal point)?

a.4.8 years

b.3.4 years

c.2.0 years

d.1.4 years