What is the average accounting rat of return (apr) on a piece of equipment that will cost $1.2 million and that will result in pretax cost savings of $380,000 for the first three years and then $280,000 for the following three years?Assume that the machinery will be deprciated to a salvage value of 0 over six years using the straight-line method and the company’s tax rate of is 32%.If the acceptance decision is based on hte project exceeding an ARP pf 20%, should thsi machinery be purchased?
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