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question project a requires a 400 000 initial investment for newmachinery with a fiv 4277157

Question

Project A requires a $400,000 initial investment for newmachinery with a five-year life and a salvage value of $37,500. Thecompany uses straight-line depreciation. Project A is expected toyield annual net income of $29,000 per year for the next fiveyears. Compute Project A’s accounting rate of return.

Accounting Rate of Return

Annual after-tax net income

/

Annual average investment

=

Accounting rate of return

$29,000

 

?

=

% ?

 

 

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