E26-10 Barker Mills is shopping for new equipment. Managers are considering two invest- ments. Equipment manufactured by Li. Inc., costs $400,000 and will last for five years, with no residual value. The Li equipment is expected to generate annual operating income of $48,000. Equipment manufactured by Veras Products is priced at $500,000 and will remain useful for six years. It promises annual operating income of $92,750, and its expected residual value is $30,000. Which equipment offers the higher accounting rate of return?