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When calculating the annual rate of return, the average investment (assuming straight line depreciation) is equal to original investment divided by 2 salvage value divided
When calculating the annual rate of return, the average investment (assuming straight line depreciation) is equal to original investment divided by 2 salvage value divided by 2 (original investment minus salvage value) divided by 2. (original investment plus salvage value) divided by 2. Save
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