Alpha IncIs Evaluating the Purchase of a Machine Costing $350,000

Multiple Choice

Alpha Inc.is evaluating the purchase of a machine costing $350,000.The expected useful life of the machine is 5 years at the end which it would have no residual value, and the depreciation is assumed to be on straight-line basis.The estimated total income from the machine is $500,000.The expected average rate of return for this machine is:

A) 26.4%.
B) 42.6%.
C) 38.5%.
D) 57.1%.