A company is planning to purchase a machine that will cost $34,800, will have a six-year life, and will have 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. What is the accounting rate of return for this machine?

Sales $ 105,000

Costs:

Manufacturing $ 51,200

Depreciation on machine 5,800

Selling and administrative expenses 45,000 (102,000)

Income $ 3,000

Answer rating: 100% (QA)

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