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What is the accounting rate of return on the investment

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Reference no: EM132107548

Question - Dierks Bentley Tools Co. is considering investing in a specialized equipment costing $800,000. The equipment has a useful life of 5 years and a residual value of $100,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are given below:

Year 1

$200,000

2

250,000

3

150,000

4

45,000

5

35,000

$680,000

What is the accounting rate of return on the investment?

Reference no: EM132107548

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