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tell the answer first then explain why its true

1. Peet's Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in cash flow of $120,000. The equipment will have an initial cost of $500,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $75,000, what is the accounting rate of return? Ignore income taxes. A. 7.0% B. 8.75% C. 30.00% D. 13.75%