Question
Kitchener Company runs hardware stores in Alberta. Kitchener's management estimates that if it invests $125,000 in a new computer system, it can save $26,000 in
Kitchener Company runs hardware stores in Alberta. Kitchener's management estimates that if it invests $125,000 in a new computer system, it can save $26,000 in annual cash operating costs. The system has an expected useful life of nine years and no terminal disposal value. The required rate of return is 14%. Ignore income tax issues in your answers. Assume all cash flows occur at year-end except for initial investment amounts.
d. Calculate the accrual accounting rate of return based on net initial investment (assume straight-line depreciation).The AARR (accrual accounting rate of return) is
enter your response here%.
(Round interim calculations to the nearest whole dollar. Round your final answer to the nearest tenth of a percent, X.X%.)
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