Martin Production Co.is considering investing in specialized equipment costing $975,000.The equipment has a useful life of five years and a residual value of $75,000.Depreciation is calculated using the straight-line method.The expected net cash inflows from the investment are given below:

Compute the accounting rate of return on the investment,Show your calculations and round to two decimal places.

Question

Martin Production Co.is considering investing in specialized equipment costing $975,000.The equipment has a useful life of five years and a residual value of $75,000.Depreciation is calculated using the straight-line method.The expected net cash inflows from the investment are given below:
  
Compute the accounting rate of return on the investment,Show your calculations and round to two decimal places.

Quizplus · Accepted Answer

The Answer of Martin Production Co.is considering investing in specialized equipment costing $975,000.The equipment has a useful life of five years and a residual value of $75,000.Depreciation is calculated using the straight-line method.The expected net cash inflows from the investment are given below:
  
Compute the accounting rate of return on the investment,Show your calculations and round to two decimal places.