Dunlop Tyres Company Ltd has carried out some research that shows that the business could provide a standard tyre that it has recently developed. Provision of the tyre would require investment in a machine that would cost $100,000, payable immediately. Sales of the tyres would take place throughout the next five years. At the end of that time, it is estimated that the machine could be sold for $ 20,000. Inflows and outflows from sales of the service would be expected to be as follows: Time 0 1 2 3 4 5 5 Description Cost of machine Operating profit before depreciation Operating profit before depreciation Operating profit before depreciation Operating profit before depreciation Operating profit before depreciation Disposal proceeds from the machine Cashflows ( 100,000) 20,000 40,000 60,000 60,000 20,000 20,000 Required: a. Assuming 'straight-line' depreciation, calculate the following: 1. the annual average operating profit before depreciation (2 marks) ii. the annual depreciation charge (2.5 marks) iii. the average annual operating profit after depreciation (1.5 marks) iv. the average investment (2.5 marks) V. the accounting rate of return (ARR) for this investment (3 marks) b. If the company had set 35% target of ARR, should it accept this project or not? (1.5 marks)