Solution-Calculate accounting rate of return

Calculate accounting rate of return

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Reference no: EM133045938

Problem - Wildhorse Corp. management is considering purchasing a machine that will cost $117,250 and will be depreciated on a straight-line basis over a five-year period. The sales and expenses (excluding depreciation) for the next five years are shown in the following table. The company's tax rate is 34 percent.

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	$123,450	$178,875	$241,455	$260,440	$272,125
Expenses	$133,410	$126,488	$139,289	$146,112	$133,556

Wildhorse will accept all projects that provide an accounting rate of return (ARR) of at least 45 percent.

Required -

1. Calculate accounting rate of return.

2. Calculate the average net income.

3. Calculate the average book value.

Reference no: EM133045938

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Calculate accounting rate of return

Reference no: EM133045938

Reference no: EM133045938

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