Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by RouseRouse Inc. costs $ 950 comma 000$950,000 and will last sixsix years and have no residual value. The RouseRouse equipment will generate annual operating income of $ 171 comma 000$171,000. Equipment manufactured by LittletonLittleton Limited costs $ 1 comma 200 comma 000$1,200,000 and will remain useful for sevenseven years. It promises annual operating income of $ 238 comma 800$238,800, and its expected residual value is $ 110 comma 000$110,000.

1 -Which equipment offers the higher ARR? First, enter the formula, then calculate the ARR (Accounting Rate of Return) for both pieces of equipment.

2-

Which equipment offers the higher ARR?

The

Littleton

Rouse

equipment offers the higher rate of return.