A new manufacturing machine is expected to cost $278,000, have an eight-year life, and a $30,000 salvage value. The machine will yield an annual incremental after-tax income of $35,000 after deducting the straight-line depreciation. Compute the accounting rate of return for the investment.
A. 23.4%.
B. 12.2%.
C. 24.5%.
D. 22.7%.
E. 46.9%.
Answer: D
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