San Marco has a $4,000,000 asset investment and is subject to a 30% income tax rate. Cash inflows are expected to average $600,000 before tax over the next few years; in contrast, average income before tax is anticipated to be $500,000. The company's after-tax accounting rate of return is:

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The after-tax accounting rate of return is calculated as follows:After-tax accounting rate of return = (Average income before tax - Income tax) / Asset investment= ($500,000 - $500,000 * 0.30) / $4,000,000= $350,000 / $4,000,000= 0.0875= 8.75%

San Marco Has a $4,000,000 Asset Investment and Is Subject