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    Accounting Rate of Returns for Machines

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    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...


    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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    Solution Summary

    The expert examines accounting rate of returns for machines.