Beyer Corporation is considering buying a machine for $25,000.Its estimated useful life is five years,with no salvage value.Beyer anticipates annual net income after taxes of $1,500 from the new machine.What is the accounting rate of return assuming that Beyer uses straight-line depreciation and that income is earned uniformly throughout each year?

Question

Quizplus · Accepted Answer

Accounting rate of return = $1,500/ [($25,000 + $0)/2] = 12%

Beyer Corporation Is Considering Buying a Machine for $25,000