Solution-Calculate the accounting rate of return for this

Calculate the accounting rate of return for this project

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Reference no: EM132999012

Question - Taomi Ltd, a competitor of Kievon Ltd, also intends to venture into the hair straightening dryer market. They have estimated the initial investment to be similar to Kievon's $4 million, and installation cost would be an additional $150 000.

Year (t)	1	2	3	4	5
Net Profit	900,000	1,800,000	2,000,000	2,000,000	1,500,000

Taomi has estimated the annual net profits (after tax) as follows:

(a) Calculate the Accounting Rate of Return for this project.

(b) Discuss one advantage the ARR method has over the other investment appraisal methods from a shareholder's point of view.

Reference no: EM132999012

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Calculate the accounting rate of return for this project

Reference no: EM132999012

Reference no: EM132999012

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