Compute the ARR for the proposal

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Reference no: EM132055977

Accounting Rate of Return : GIVEN : Asset cost = $4,000,000 with salvage value = to $800,000.

The asset is expected to generate the folling accounting net income from it’s projected 5 year service life ::

1-$250,000

2-$250,000

3-$150,000

4-$150,000

5- $200,000

Compute the ARR for the proposal :

IF WACC for the Corp = 9% , evaluate the proposal.

Give Advantage/Disadvantage of ARR method.

Reference no: EM132055977

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