A Company Is Planning to Purchase a Machine That Will

question 75

Multiple Choice

A company is planning to purchase a machine that will cost $24,000,have a six-year life,and be depreciated over a three-year period with no salvage value.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?

• A)33.3%.
• B)16.7%.
• C)50.0%.
• D)8.3%.
• E)4%.

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