Watson Corporation is considering buying a machine for $25,000. Its estimated useful life is 5...
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Accounting
Watson Corporation is considering buying a machine for $25,000. Its estimated useful life is 5 years, with no salvage value. Watson anticipates annual net income after taxes of $2,000 from the new machine. What is the accounting rate of return assuming that Watson uses straight-line depreciation and that income is earned uniformly throughout each year?
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8.0%.
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10.7%.
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10.0%.
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13.3%.
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16.0%.
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