A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place.
$\begin{array}{lr}
& \text { Project } \
\text { Investment } & \$ 875,000 \
\text { Residual value } & 0 \
\text { Operating income: } & \
\text { Year 1 } & 120,000 \
\text { Year 2 } & 120,000 \
\text { Year 3 } & 120,000 \
\text { Year 4 } & 120,000 \
\text { Year 5 } & 120,000
\end{array}$

Question

A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place.
 $\begin{array}{lr}
& \text { Project } \
\text { Investment } & \$ 875,000 \
\text { Residual value } & 0 \
\text { Operating income: } & \
\text { Year 1 } & 120,000 \
\text { Year 2 } & 120,000 \
\text { Year 3 } & 120,000 \
\text { Year 4 } & 120,000 \
\text { Year 5 } & 120,000
\end{array}$

Quizplus · Accepted Answer

The Answer of A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place.
 $\begin{array}{lr}
& \text { Project } \
\text { Investment } & \$ 875,000 \
\text { Residual value } & 0 \
\text { Operating income: } & \
\text { Year 1 } & 120,000 \
\text { Year 2 } & 120,000 \
\text { Year 3 } & 120,000 \
\text { Year 4 } & 120,000 \
\text { Year 5 } & 120,000
\end{array}$

A Company Is Evaluating an Investment