Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.

The machine generates, on average, $4,900 per year in additional net income. What is the average accounting return for this machine?

AAR=

\begin{tabular}{lrrr} & Year 0 & Year 1 & Year 2 \\ Gross investment & $65,000 & $65,000 & $65,000 \\ Less: Accumulated depreciation & 0 & 16,250 & 32,500 \\ \cline { 2 - 5 } Net investment & $65,000 & $48,750 & $32,500 \end{tabular}