Assuming straight line depreciation method

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Reference no: EM131907831

BlackShark Inc. invested $220,000 in a new machine. The machine is expected to last 5 years (assuming a straight line depreciation method). There is no salvage value for this machine at the end of 5th year. BlackShark predicts that the earning before tax (E.B.T) generated from this machine will be $80,000 per year for the first two years and then $78,000 per year for the remaining three years. Calculate the average accounting return, given that the tax rate is 20%.

Reference no: EM131907831

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