Question

Carmel Corporation is considering the purchase of a machine costing $45,000 with a 4-year useful life and no salvage value. Carmel uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is Carmel's average investment?

Answer 1

($45,000 + $0)/2 = $22,500

Step-by-step explanation:

we cant tell the percentage per year because we don't know how much they are paying in taxes annually.