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Truman Holidays Ltd has the opportunity to acquire a luxury barge for canal holidays. The barge will cost 146,000 and will have an expected life
Truman Holidays Ltd has the opportunity to acquire a luxury barge for canal holidays. The barge will cost 146,000 and will have an expected life of six years. Annual operating profits from the barge are expected to be as follows: (Click here to view the financial data.) At the end of its useful life, the barge will be sold for 24,000. - Data table The business has a target accounting rate of return of 14% for new investment projects. 1. Calculate the accounting rate of return for the barge. 2. Should the barge be purchased? Operating profits Year 1 19,000 The accounting rate of return for the barge is %. (Round your answer to the nearest per Year 2 23,000 Year 3 14,000 The accounting rate of return is the required accounting rate of return for new proje Year 4 13,000 Year 5 15,000 Year 6 8,000 Print Done The accounting rate of return for the barge is %. (Round your answer to the nearest per cent.) The accounting rate of return is the required accounting rate of return for new projects and so the barge purchased. above below The accounting rate of return for the barge is %. (Round your answer to the nearest per cent.) The accounting rate of return is the required accounting rate of return for new projects and so the barge purchased. should be should not be
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