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Compute the rate of return earned

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Reference no: EM132842393

Problem - Burrell Company purchased a machine for $39,000 on January 2, 2019. The machine has an estimated service life of 5 years and a zero estimated residual value. The asset earns income before depreciation and income taxes of $19,500 each year. The tax rate is 20%.

Required - Compute the rate of return earned (on the average net asset value) by the company each year of the asset's life under the straight-line and the double- declining-balance depreciation methods. Assume that the machine is the company's only asset.

Reference no: EM132842393

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