What is the accounting rate of return on the investment

Assignment Help Accounting Basics

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

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