Harrison Company is considering the purchase of a new machine for $80,000.

The machine would generate net cash

inflow before depreciation and taxes of $31,294 per year for four years. At the end of four years, the machine would
have no salvage value. The company’s cost of capital is 12 percent. The company uses straight-line depreciation
with no mid-year convention and has a 40 percent tax rate.

189. What is the accounting rate of return on the original investment in the machine approximated to two
decimal points?
a. 14.12% c. 39.12%
b. 8.47% d. 16.92%

190. What is the net present value for the machine?

a. $81,320 c. $15,040
b. $1,320 d. $(22,976)

191. What is the internal rate of return for the machine rounded to the nearest percent?
a.below 12 percent d. between 16 and 18 percent
b.between 12 and 14 percent e. above 18 percent
c. between 14 and 16 percent