Question: 5. Average Accounting Return Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. PURCHASE DATE YEAR 1 YEAR 2

5. Average Accounting Return Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts. PURCHASE DATE YEAR 1 YEAR 2 YEAR 3 YEAR 4 Gross investment $46.CC0 $46.000 $45.0C0 $46,000 $46,000 Less: Accumulated depreciation 0 11.500 23.000 34,500 46.000 Net investment $45100 $34.500 $23010 $17,500 The machine generates, on average, $4.700 per year in additional net income. a. What is the average accounting return for this machine? b. What three flaws are inherent in this decision rule

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