A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year.Management predicts this machine has a 9-year service life and a $120,000 salvage value, and it usesstraight-line depreciation. Compute this machine's accounting rate of return.Accounting Rate of ReturnChoose Numerator:Choose Denominator:Accounting Rate of Return%3DAccounting rate of return

Accounting rate of return is equal to Annual net income divided by Average Investment ARR= Annual…

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,000 achine's accounting rate of return.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

A machine costs $600,000 and is expected to yield an after-tax net income of $23,000 each year.
Management predicts this machine has a 9-year service life and a $120,000 salvage value, and it uses
straight-line depreciation. Compute this machine's accounting rate of return.
Accounting Rate of Return
Choose Numerator:
Choose Denominator:
Accounting Rate of Return
%3D
Accounting rate of return

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