Question: Omaha Plating Corporation is considering purchasing a machine for $2,000,000. The machine is expected to generate a constant after-tax income of $80,000 per year for

Omaha Plating Corporation is considering purchasing a machine for $2,000,000. The machine is expected to generate a constant after-tax income of $80,000 per year for 13 years. The firm will use straight-line (SL) depreciation for the new machine over 10 years with no residual value.

What is the estimated accounting (book) rate of return (rounded to two decimal places) on the initial investment?

Multiple Choice

11.00%.

4.00%.

7.00%.

8.00%.

15.00%.

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