Question: Best Cleaners is considering whether to purchase a delivery truck that
Best Cleaners is considering whether to purchase a delivery truck that will cost $29,000, last six years, and have an estimated residual value of $5,000. Average annual net income from the delivery service is estimated to be $4,000. Best Cleaners’ owners seek to earn an accounting rate of return of 20 percent. Compute the average investment cost and the accounting rate of return. Should the investment be made?
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