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Calculate the accounting rate of return

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Question - Mimi Company is considering a capital investment of $250,000 in new equipment. The equipment is expected to have a 5-year useful life with no salvage value. Depreciation is computed by the straight-line method. During the life of the investment, annual net income and cash inflows are expected to be $25,000 and $75,000, respectively. Mimi's minimum required rate of return is 10%.

Part (a): Calculate the payback period.

Part (b): Calculate the net present value.

Part (c): Calculate the accounting rate of return.

Reference no: EM132008381

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