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The net cash flows of each year in the following 5 years are estimated as follows: Initial investment:$70,000 Net cash flow year 1:(20,000) Net cash
The net cash flows of each year in the following 5 years are estimated as follows:
Initial investment:$70,000
Net cash flow year 1:(20,000)
Net cash flow year 2:10,000
Net cash flow year 3:20,000
Net cash flow year 4:40,000
Net cash flow year 5:30,000
Estimated sale of truck year 5:10,000
Question 1: (10 marks)
If your required rate of return is 8%, what would be your decision based on the accounting rate of return (ARR)?
Total Depreciation =
Average Profit =
Average investment =
ARR =
Decision? Why?
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