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Average accounting rate of return

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An investment has an initial cost of $2.30 million and will generate the net income amounts shown below. This investment will be depreciated straight line to zero over the life of the project. Should this project be accepted based on the average accounting rate of return if the required rate is 16 percent? Why or why not?

Year 1 2 3 4 5

Net income $168,300 $181,200 $128,700 $252,400 $230,500

Reference no: EM132596651

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