A company purchases a non-current asset with a useful economic life of ten years for $1.25 million.
Fantastic news! We've Found the answer you've been seeking!
Question:
A company purchases a non-current asset with a useful economic life of ten years for $1.25 million. It is expected to generate cash flows over the ten year period of $250,000 per annum before depreciation. The company charges depreciation over the life of the asset on a straight-line basis. At the end of the period it will be sold for $250,000.
What is the accounting rate of return for the investment (based on average profits and average investment)?
Related Book For
Posted Date: