A company is considering purchasing equipment costing $100,000 to expand their business.The equipment is expected to have a useful life of 4 years with no disposal value.The estimated savings in cash operating costs are as follows:

Year Amount

1 70,000

2 50,000

3 40,000

4 20,000

Compute the accrual accounting rate of return based on the net initial investment.Assume the straight-line depreciation method is applied and use the average annual savings in cash operating costs when computing the numerator for the accrual accounting rate of return.