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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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