·· A company has the following cash flows for a project. What is the Accounting Rate of Return (ARR)?

Cash Flows:

• Initial Investment: $100,000
• Annual Operating Income: $20,000 (for 5 years)
• Salvage Value at End of Year 5: $10,000

Requirements:

1. Calculate the ARR.
2. Compare ARR with a required rate of 15%.
3. Assess the impact of depreciation on ARR.
4. Evaluate the decision to invest based on ARR.