What is the accounting rate of return?

Chart Values are Based on:

n =?

i =?

Annual cash flow::: Present Value of an Annuity of 1 amount? PV factor? present value?

Residual value:::Present Value of 1 amount? PV factor? present value?

Present value of cash inflows?

Net present value?

Net present value?

Factor Company is planning to add a new product to its line. To manufacture this product, the company needs to buy a new machine at a $495,000 cost with an expected four-year life and a $15,000 salvage value. All sales are for cash, and all costs are out-of-pocket, except for depreciation on the new machine. Additional information includes the following. (PV of $1,FV of $1,PVA of $1, andFVA of $1)(Use appropriate factor(s) from the tables provided.)

Expected annual sales of new product$1,940,000

Expected annual costs of new product

Direct materials490,000

Direct labor670,000

Overhead (excluding straight-line depreciation on new machine)337,000

Selling and administrative expenses147,000

Income taxes34%