How do calculate accounting rate of return

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Reference no: EM132834184

Problem 1: An initial investment of $160,000 is expected to generate annual cash inflow of $42,000 for 5 years. Depreciation is allowed on the straight line basis. It is estimated that the project will generate scrap value of $10,000 at end of the 5th year. Calculate its accounting rate of return assuming that there are no other expenses on the project.

Reference no: EM132834184

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