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Question 3 Taomi Lid, a competitor of Kievon Ltd, also intends to venture into the hair straightening dryer market. They have estimated the initial investment

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Question 3 Taomi Lid, a competitor of Kievon Ltd, also intends to venture into the hair straightening dryer market. They have estimated the initial investment to be similar to Kievon's $4 million, and installation cost would be an additional $150 000. Taomi has estimated the annual net profits (after tax) as follows: Year (t) 1 2 3 4 5 Net Profit 900 000 1 800 000 2 000 000 2 000 000 1 500 000 (a) Calculate the Accounting Rate of Return for this project. ( Type Working on word ) (5 marks) (b) Discuss one advantage the ARR method has over the other investment appraisal methods from a shareholder's point of view. (Word format with at least 1 citation) (2 marks)

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