Flint Systems is considering investing in production-management software that costs $600,000,has $60,000 residual value,and leads to cost savings of $150,000 per year over its five-year life.Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return?

Question

Quizplus · Accepted Answer

The average amount invested is calculated as the average of the initial investment and the residual value: ($600,000 + $60,000) / 2 = $330,000.

Flint Systems Is Considering Investing in Production-Management Software That Costs