Question
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. Purchase Date Year 1 Year 2 Year 3 Year 4
Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.
Purchase Date Year 1 Year 2 Year 3 Year 4 Gross investment $ 69,000 $ 69,000 $ 69,000 $ 69,000 $ 69,000 Less: Accumulated depreciation 0 17,250 34,500 51,750 69,000 Net investment $ 69,000 $ 51,750 $ 34,500 $ 17,250 $ 0
The machine generates, on average, $5,700 per year in additional net income.
What is the average accounting return for this machine? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
AAR %
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