A company is planning to purchase a machine that will cost

Reference no: EM13575018

A company is planning to purchase a machine that will cost $33,600, 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?

Sales		$138,000
Costs:
Manufacturing	$53,600
Depreciation on machine	5,600
Selling and administrative expenses	46,000	(105,200)

Income before taxes		$32,800
Income tax (35%)		(11,480)

Net income		$21,320

Reference no: EM13575018

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A company is planning to purchase a machine that will cost

Reference no: EM13575018

Reference no: EM13575018

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