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What is the accounting rate of return for this machine

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Reference no: EM132759134

Question - A company is planning to purchase a machine that will cost $35,400 with a six-year life and 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:

Sales $106,000

Costs: Manufacturing $51,300

Depreciation on machine 5,900

Selling and administrative expenses 46,000 (103,200)

Income before taxes $2,800

Income tax (35%) (980)

Net income $1,820

Required - What is the accounting rate of return for this machine?

Reference no: EM132759134

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