Accounting rate of return associated equipment investment

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Reference no: EM13789490

Clapton Corporation is considering an investment in new equipment costing $900,000. The equipment will be depreciated on a straight-line basis over a ten-year life and is expected to have a salvage value of $90,000. The equipment is expected to generate net cash flows of $140,000 for each of the first five years and $100,000 for each of the last five years. What is the accounting rate of return associated with the equipment investment?

8.89%

9.23%

8.52%

7.88%

Reference no: EM13789490

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