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Calculate the accounting rate of return

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Question - Plimo Limited is considering an investment in a fixed asset which costs $511,000. The asset is expected to generate cash inflows of $146,000 each year for the next four years. The company intends to sell the asset at the end of year 4 for an estimated residual value of $30,000. The asset will be depreciated straight-line over the next four years. The discount rate for the project is 12%.

Required - Calculate the accounting rate of return, and show your answer to the nearest 0.1%.

Reference no: EM132527892

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