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Comfort Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Smith Inc. costs $1,000,000 and will last
Comfort Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Smith Inc. costs $1,000,000 and will last five years and have no residual value. The Smith equipment will generate annual operating income of $160,000. Equipment manufactured by Riverside Limited costs $1,100,000 and will remain useful for six years. It promises annual operating income of $236,500, and its expected residual value is $105,000. Which equipment offers the higher ARR? First, enter the formula, then calculate the ARR (Accounting Rate of Return) for both pieces of equipment. (Enter the answer as a percent rounded to the nearest tenth percent.) Accounting rate of return Average annual operating income from asset I Initial investment Smith
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