An investment has an initial cost of $462,000 and will generate the net income amounts shown below.
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An investment has an initial cost of $462,000 and will generate the net income amounts shown below. This investment will be depreciated linearly to zero during the four years of the project's life. Should this project be accepted based on the average accounting rate of return if the required rate is 14.75 percent? Why or why not?
Year | Net Income | |
1 | ps | 27,000 |
2 | 24.800 | |
3 | 37,500 | |
4 | 45,000 |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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