Question
Super Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Preston Inc. costs $950,000 and will
Super Golf Products is considering whether to upgrade its equipment. Managers are considering two options. Equipment manufactured by Preston Inc. costs $950,000 and will last five years and have no residual value. The Preston equipment will generate annual operating income of $171,000. Equipment manufactured by Rustic Limited costs $1,200,000 and will remain useful for six years. It promises annual operating income of $238,800, and its expected residual value is $110,000. 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.) Preston Rustic Which equipment offers the higher ARR? The equipment offers the higher rate of return. Accounting = rate of return % %
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