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A company is planning to purchase a machine that will cost $30,600 with a six-year life and no salvage value. The company uses straight-line depreciation. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine?

Sales				$	98,000
Costs:
Manufacturing	$	50,500
Depreciation on machine		5,100
Selling and administrative expenses		38,000			(93,600	)
Income before taxes				$	4,400
Income tax (30%)					(1,320	)
Net income				$	3,080

Multiple Choice

• 10.07%.

• 50.00%.

• 20.13%.

• 5.10%.

• 33.33%.

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