# Accounting Rate of Returns for Machines

Cleug is replacing one of his machines. He can choose between machine A or machine B. Details of the machine are as follows...

Estimated receipts and payments are as follows...

Required:

a) Calculate the accounting rate of return (ARR) for each machine. [12]

b) Calculate the payback period for each machine. [4]

c) Calculate the net present value (NPV) of each machine. [11]

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The expert examines accounting rate of returns for machines.

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