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Homework: HW #7 - Chapter 12 Save Score: 0.56 of 1 pt 6 of 9 (6 complete) HW Score: 47.22%, 4.72 of 10 pts %E12-21A
Homework: HW #7 - Chapter 12 Save Score: 0.56 of 1 pt 6 of 9 (6 complete) HW Score: 47.22%, 4.72 of 10 pts %E12-21A (similar to) Question Help Slice 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 four years and have no residual value. The Smith equipment will generate annual operating income of $160,000. Equipment manufactured by Lakeshore Limited costs $1,170,000 and will remain useful for five years. It promises annual operating income of $234,000, and its expected residual value is $115,000. 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.) Smith Average annual operating income from asset 160,000 23000 $ Accounting rate of return 16.0 % 1.96 % 1 $ / $ Initial investment 1,000,000 1,170,000 Lakeshore =
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