Davis Company is considering the purchase of a new piece of equipment that will cost $1,600,000 and have a life of five years with no expected salvage value.The expected cash flows associated with the project are as follows:

- What is the accounting rate of return for the project?

Question

Davis Company is considering the purchase of a new piece of equipment that will cost $1,600,000 and have a life of five years with no expected salvage value.The expected cash flows associated with the project are as follows:

- What is the accounting rate of return for the project?

-  What is the accounting rate of return for the project?

Quizplus · Accepted Answer

ARR = $600,000 / $1,600,000 = 0.375 = 37.5%

Davis Company Is Considering the Purchase of a New Piece