A firm purchased a machine that cost $28,000 and is expected to meet the needs of the business for 4 years. The machine will depreciate by $7,000 per year and at the end of year 4 the machine will have no book value. During its useful life the machine is expected to produce net cash flows of $9,000 per year.

a) Using the Accounting Rate of Return, you are asked to make a recommendation as to whether the project

should proceed?

b) Do you have enough information to make the assessment? What do you need?

Answer rating: 100% (QA)

Accounting Rate of Return ARR Analysis a Recommendation based on ARR 1 Calculate ARR Total depreciat... View the full answer