Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.

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?

PURCHASE YEAR 1 YEAR 2 YEAR 3 YEAR 4 Gross investment Less: Accumulated depreciation Net investment DATE S46,000 $46,000 $46,000 46,000S46,000 $46,000 23,000 34,500 $34,500 $23,000$11,500 S0 11,500 46,000