Krostel Company is planning to acquire a machine costing P 500,000 with a useful life of 3 years with a salvage value of P 20,000. This machine will generate annual cash savings of P 250,000. Income taxes are 20%. The company uses the SYD method for computing depreciation. What is the accounting rate of return on the average cost of investment?  a. 27.7%  b. 32.7%  c. 61.5%  d. 76.7%

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Krostel Company is planning to acquire a machine costing P 500,000 with a useful life of 3 years with a salvage value of P 20,000. This machine will generate annual cash savings of P 250,000. Income taxes are 20%. The company uses the SYD method for computing depreciation. What is the accounting rate of return on the average cost of investment? 
a. 27.7% 
b. 32.7% 
c. 61.5% 
d. 76.7% 

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