Hammer Corporation wants to purchase a new machine for $285,000. Management predicts that the machine will produce

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Hammer Corporation wants to purchase a new machine for $285,000. Management predicts that the machine will produce sales of $290,0000 each year for the next 5 years. Expenses are expected to Include direct materials, direct labor, and factory overhead (excluding deprecation) totaling $89,000 per year. The firm uses straight-line deprecation with an assumed residual (salvage) value of $50,000. Hammer's combined Income tax rate, t, Is 40%.

What is the estimated accounting (book) rate of return (ARR) for the proposed Investment, based on average Investment?

Multiple Choice

43%.

45%.

48%.

55%.

65%.

Posted Date: Apr 05, 2022 05:54 AM

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Hammer Corporation wants to purchase a new machine for $285,000. Management predicts that the machine will produce

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