Question
Dartis Company is considering investing in a specialized equipment costing $600,000. The equipment has a useful life of 5 years and a residual value of
Dartis Company is considering investing in a specialized equipment costing $600,000. The equipment has a useful life of 5 years and a residual value of $60,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are given below.
| Year 1 | $200,000 |
| 2 | 150,000 |
| 3 | 160,000 |
| 4 | 95,000 |
| 5 | 75,000 |
| $680,000 |
What is the accounting rate of return on the investment?
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Fundamentals Of Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
13th Edition
1265553602, 978-1265553609
