McDonald Industries Is Considering the Purchase of a $180,000 Machine

question 122

Multiple Choice

McDonald Industries is considering the purchase of a $180,000 machine that is expected to result in a decrease of $20,000 per year in cash expenses.This machine,which has no residual value,has an estimated useful life of 15 years and will be depreciated on a straight-line basis.For this machine,the accounting rate of return would be

• A)4.4 percent
• B)8.9 percent
• C)11.1 percent
• D)22.2 percent

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