Generic Motors Corporation is planning to invest $175,000 in year zero (today) in new equipment. This investment is expected to generate net cash flows of $70,000 a year for the next 4 years (years 1-4). The salvage value after 4 years is zero. The discount rate (cost of capital) is 20% a year. What is the accounting rate of return (ARR) for this project?

To compute ARR, first compute:

a) annual depreciation=$

annual income=$

average investment=$

ARR =