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Author Question: Mahtomedi Corporation is considering investing in specialized equipment costing $240,000. The ... (Read 58 times)

ts19998

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Mahtomedi Corporation is considering investing in specialized equipment costing $240,000. 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

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

What is the accounting rate of return on the investment?
◦ 9.25%
◦ 8.75%
◦ 6.67%
◦ 16.40%


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Marked as best answer by ts19998 on Jan 5, 2020

atrochim

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ts19998

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Reply 2 on: Jan 5, 2020
Gracias!


6ana001

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Reply 3 on: Yesterday
Excellent

 

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