What is the accounting rate of return for centris corp

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Reference no: EM132972553

Centris Corporation is considering investing in equipment costing Php 125,000. The equipment has a useful life of 5 years and a residual value of Php 10,000. The company is using the straight-line method.

The expected net cash inflows from the investment are:

Year 1 Php 30,000

Year 2 Php 45,000

Year 3 Php 55,000

Year 4 Php 20,000

Year 5 Php 12,500

Total cash inflows Php 162,500

Centris Corporation's cost of capital is 14%.

Problem 1: What is the accounting rate of return?

Select one:

a. 7.60%

b. 18.40%

c. 5.60%

d. 44.40%

Reference no: EM132972553

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