5. The Fine Clothing Factory wants to replace an old machine with a new one. The old machine can be sold to a small factory for ( $ 10,000 ). The new machine would increase annual revenue by ( $ 150,000 ) and annual operating expenses by ( $ 60,000 ). The new machine would cost ( $ 360,000 ). The estimated useful life of the machine is solutionspile.com

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5. The Fine Clothing Factory wants to replace an old machine with a new one. The old machine can be sold to a small factory for $ \$ 10,000 $. The new machine would increase annual revenue by $ \$ 150,000 $ and annual operating expenses by $ \$ 60,000 $. The new machine would cost $ \$ 360,000 $. The estimated useful life of the machine is 12 years with zero salvage value. (a) Compute accounting rate of return (ARR) of the machine using above information. (13\%) (b) Should Fine Clothing Factory purchase the machine if management wants an accounting rate of return of $ 15 \% $ on all capital investments? (2\%)

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