A company is planning to purchase a machine that will cost $36,000 with a six-year...
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Accounting
A company is planning to purchase a machine that will cost $36,000 with a six-year life and no salvage value. The company uses straight-line depreciation. 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 $ 107,000 Costs: Manufacturing $ 51,400 Depreciation on machine 6,000 Selling and administrative expenses 47,000 (104,400 ) Income before taxes $ 2,600 Income tax (30%) (780 ) Net income $ 1,820
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