The management of Arnold Corporation is considering the purchase of a new machine costing $400,000....
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Accounting
The management of Arnold Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information the following data is available.
Year
Income from Operations
Net Cash Flow
1
$100,000
$180,000
2
40,000
120,000
3
20,000
100,000
4
10,000
90,000
5
10,000
90,000
The accounting rate of return for this investment is:
Group of answer choices
16%
58%
10%
18%
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