The Auto Shop is buying some new equipment at a cost of $218,900. This equipment will be depreciated on a straight line basis to a zero book value its 8-year life. The equipment is expected to generate net income of $36,000 a year for the first four years and $22,000 a year for the last four years. What is the average accounting rate of return?
A) 15.48 percent
B) 17.76 percent
C) 18.09 percent
D) 23.72 percent
E) 26.50 percent

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The Answer of The Auto Shop is buying some new equipment at a cost of $218,900. This equipment will be depreciated on a straight line basis to a zero book value its 8-year life. The equipment is expected to generate net income of $36,000 a year for the first four years and $22,000 a year for the last four years. What is the average accounting rate of return?
A) 15.48 percent
B) 17.76 percent
C) 18.09 percent
D) 23.72 percent
E) 26.50 percent

The Auto Shop Is Buying Some New Equipment at a Cost