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Should the project be undertaken

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Question - A company has a target accounting rate of return of 20% and is now considering the following project:

Cost of an asset TZS 800,000

Estimated life 4 years

Estimated profit before depreciation: Year 1 TZS 200,000

Year 2 TZS 250,000

Year 3 TZS 350.000

Year 4 TZS 250,000

The capital asset would be depreciated by 25% of its cost each year, and will have no residual value. Should the project be undertaken?

Reference no: EM133108037

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