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What is the accounting rate of return on the average cost

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Reference no: EM133169226

Question - Krostel Company is planning to acquire a machine costing P 500,000 with a useful life of 3 years with a salvage value of P 20,000. This machine will generate annual cash savings of P 250,000. Income taxes are 20%. The company uses the SYD method for computing depreciation. What is the accounting rate of return on the average cost of investment?

a. 27.7%

b. 32.7%

c. 61.5%

d. 76.7%

Reference no: EM133169226

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