Question: Doorstep Cleaners is considering whether to purchase a delivery truck
Doorstep Cleaners is considering whether to purchase a delivery truck that will cost $50,000, 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. Doorstep Cleaners’ owners seek to earn an accounting rate of return of 10 percent. Compute the average investment cost and the accounting rate of return. (Round percentages to one decimal place.) Should the investment be made?
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