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Question(s) / Instruction(s):

A company buys a machine for $60,000 that has an expected life of 9 years and no salvage value. The company anticipates a yearly net income of $2,850 after taxes of 30%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?

  1. 2.85%.
  2. 4.75%.
  3. 6.65%.
  4. 9.50%.
  5. 42.75%.

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