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A company is considering the purchase of a new machine for $48,000. Management predicts that the machine can produce sales of $16,000 each year for the next 10 years. Expenses are expected to include direct materials, direct labor, and factory overhead totaling $8,000 per year plus depreciation of $4,000 per year. The company's tax rate is 40%. What is the approximate Accounting Rate of Return for the machine?

a) 27%.

b) 13%.

c) 17%.

d) 8%.

e) 10%.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M954023

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