What is the accounting rate of return on the investment

Reference no: EM131900381

Problem

Landrum Corporation is considering investing in specialized equipment costing $250,000. The equipment has a useful life of 5 years and a residual value of $20,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment? are:

Year 1	$60,000
Year 2	$90,000
Year 3	$110,000
Year 4	$40,000
Year 5	$25,000
Total cash inflows	$325,000

Landrum Corporation's required rate of return on investments is 14%.

What is the accounting rate of return on the investment?

Reference no: EM131900381

Questions Cloud

Compute the percentage change in the two quality cost : Compute the percentage change in the two quality cost categories from 2002 to 2003. White a brief explanation of the pattern of change in the two categories

How have you been able to use your top five strengths : Please refer back to your StrengthsFinder results. How have you been able to use your Top 5 Strengths in a team environment .

What was the name of the cristopher columbus flagship : What was the name of the Cristopher Columbus flagship - the ship on which Columbus travelled in his 1492 voyage to the new world?

What would be the result if this issue went to litigation : Anderson sought object to 10,000 of the cans as defective on the seventh day after receipt. What would be the result if this issue went to litigation?

What is the accounting rate of return on the investment : Landrum Corporation is considering investing in specialized equipment costing $250,000. What is the accounting rate of return on the investment?

Area of new york was leased by a swedish sea captain : What area of New York was leased by a Swedish sea captain and named after him?

Determine the cost of the property to be recorded : Determine the cost of the property to be recorded in the accounts. (Explain your answer with reference to NZ IAS 16)

How can the errors be prevented : You work part-time in a telemarketing company. Your compensation is based on the number of credit card applicants you sign up with the telemarketing approach.

Why is irresponsible to not give full context to research : Why is irresponsible to not give full context to research? In what ways do you see social media playing a role - good or bad - in this?

User Account

All Pages