Slice Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Richland Inc. costs $$1,050,000$ and

will last four years and have no residual value. The Richland equipment will generate annual operating income of $$194,250.$ Equipment manufactured by Lakeside Limited costs

$$1,200,000$ and will remain useful for five years. It promises annual operating income of $$238,800,$ and its expected residual value is $$105,000.$

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.$)$

Accounting

$=$

rate of return

$=$

$\%$

$=$

Which equipment offers the higher ARR?

The

equipment offers the higher rate of return.