Accounting Rate of Return

WeCare Clinic is planning on investing in some new echocardiogram equipment that will require an initial outlay of $175,000. The system has an expected life of five years and no expected salvage value. The investment is expected to produce the following net cash flows over its life: $73,000, $74,000, $89,000, $82,000, and $107,000.

Required:

1. Calculate the annual net income for each of the five years.

Net Income Year 1$ fill in the blankYear 2$ fill in the blank Year 3$ fill in the blank Year 4$ fill in the blank Year 5$ fill in the blank

2. Calculate the accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16"). ___________________ %

3. What if a second competing revenue-producing investment has the same initial outlay and salvage value but the following cash flows (in chronological sequence): $107,000, $107,000, $107,000, $73,000, and $15,500? Calculate its accounting rate of return. Enter your answer as a whole percentage value (for example, 16% should be entered as "16"). ___________________%