The managers of Car Design are considering two investments in equipment. Equipment manufactured by Ward, Inc., costs \(\$ 1,000,000\) and will last for 5 years, with no residual value. The Ward equipment is expected to generate annual cash inflows of \(\$ 250,000\). Equipment manufactured by Vargas Co. is priced at \(\$ 1,200,000\) and will last six years. It promises annual operating cash inflows of \(\$ 240,500\), and its expected residual value is \(\$ 100,000\). Car Design depreciates equipment using the straight-line method.
Which equipment offers the higher accounting rate of return?