A Machine Costs $180,000 and Is Expected to Yield an After-Tax

Multiple Choice

A machine costs $180,000 and is expected to yield an after-tax net income of $10,800 each year. Management estimates the machine will have a ten-year life, a $20,000 salvage value, and straight-line depreciation is used. Compute the accounting rate of return for the investment.

A) 12.0%.
B) 26.8%.
C) 11.8%.
D) 10.8%.
E) 28.8%.