Find the accounting rate of return

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Question - Janet Cara-Van Company plans to acquire equipment costing USD 600,000.00. Depreciation on the new equipment would be USD 120,000.00 each year for 5 years. The annual cash inflow before income tax from this equipment has been estimated at USD 220,000.00. The tax rate is 40%.

Required -

a. Find the accounting rate of return.

b. Indicate the relevant cash flows.

c. Find the net present value if the minimum acceptable rate of return on investment is 16%.

d. Find the payback period. Estimate the internal rate of return.

Reference no: EM132856647

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