A Company is trading in a fully depreciated old asset for a new one. Cost of the new asset is 14596 with a 5-year life and straight-line depreciation will be used. The company receives a $500 allowance for the asset traded in. Additional sales revenue from the investment will be $2,100 and expenses of $400 (excluding depreciation). The company is in a 25% tax bracket. What is the ARR for this investment?

Response Feedback from professor:

ARR requires you to divide the net gain by the average investment. You divided average investment by initial investment which is wrong.

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