plant company is contemplating the purchase of a new piece of equipment for $40,000. Plant is in the 20% income tax bracket. predicted annual after tax cash inflows from investments are $14,000,$12,000,$5,000,$13,000 and $1000 for years 1 through 5, respectively. The firm uses straightline depreciation with no residual value at the end of 5 years.

The hurdle rate for accepting new capital investment projects is 4% after tax. The estimated accounting rate of return on this project based on the initial investment is:

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