A manufacturer is considering whether to invest in a robotic system that costs $600,000, has a $40,000

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A manufacturer is considering whether to invest in a robotic system that costs $600,000, has a $40,000 residual value, and should lead to cost savings of $150,000 per year for its five-year life. In calculating the accounting rate of return (ARR), which of the following numbers should be used in the ARR equation’s numerator as average annual operating income?
a. $8,000

b. $30,000

c. $38,000

d. $112,000

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Managerial Accounting

ISBN: 9780137858514

7th Edition

Authors: Karen W. Braun, Wendy M. Tietz

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