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The management of Arnold Corporation is considering the purchase of a new machine costing $400,000....

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Accounting

The management of Arnold Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information the following data is available.

Year

Income from Operations

Net Cash Flow

1

$100,000

$180,000

2

40,000

120,000

3

20,000

100,000

4

10,000

90,000

5

10,000

90,000

The accounting rate of return for this investment is:

Group of answer choices

16%

58%

10%

18%

Answer & Explanation Solved by verified expert
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