Question - Your firm is considering purchasing a machine with the following annual, end-of-year, book investment accounts.
Purchase Date Year 1 Year 2 Year 3 Year 4
Gross investment $69,000 $69,000 $ 69,000 $ 69,000 $ 69,000
Less: Accumulated depreciation 0 17,250 34,500 51,750 69,000
Net investment $ 69,000 $ 51,750 $ 34,500 $ 17,250 $ 0
The machine generates, on average, $5,700 per year in additional net income.
What is the average accounting return for this machine?