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Centris Corporation is considering investing in equipment costing Php 125,000. The equipment has a useful life of 5 years and a residual value of Php
Centris Corporation is considering investing in equipment costing Php 125,000. The equipment has
a useful life of 5 years and a residual value of Php 10,000. The company is using the straight-line
method. The expected net cash inflows from the investment are:
Year 1 Php 30,000
Year 2 Php 45,000
Year 3 Php 55,000
Year 4 Php 20,000
Year 5 Php 12,500
Total cash inflows Php 162,500
Centris Corporation's cost of capital is 14%.
What is the accounting rate of return ?
Select one:
a. 7.60%
b. 18.40%
c. 5.60%
d. 44.40%
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