Burroughs Benstead Limited is planning an immediate investment of £500 000 in machinery.The project in which the machinery will be used is planned to last exactly five years.At the end of this period, the machinery will be scrapped, and is not expected to retain any residual value.The company's policy is to depreciate machinery on the straight line basis over its estimated useful life. Cash flows arising from the project, before taking depreciation into account, are projected to be as follows:
What is the accounting rate of return on this project?

Question

Burroughs Benstead Limited is planning an immediate investment of £500 000 in machinery.The project in which the machinery will be used is planned to last exactly five years.At the end of this period, the machinery will be scrapped, and is not expected to retain any residual value.The company's policy is to depreciate machinery on the straight line basis over its estimated useful life. Cash flows arising from the project, before taking depreciation into account, are projected to be as follows:
 What is the accounting rate of return on this project?

Quizplus · Accepted Answer

The Answer of Burroughs Benstead Limited is planning an immediate investment of £500 000 in machinery.The project in which the machinery will be used is planned to last exactly five years.At the end of this period, the machinery will be scrapped, and is not expected to retain any residual value.The company's policy is to depreciate machinery on the straight line basis over its estimated useful life. Cash flows arising from the project, before taking depreciation into account, are projected to be as follows:
 What is the accounting rate of return on this project?

Burroughs Benstead Limited Is Planning an Immediate Investment of £500