Light company Intends to introduce a soft drink in the market in the next year. The projected revenues and expenses for the next five years are as follows:

Year 1 2 3 4

Revenues 300M 200M 315M 420M

Expenses 160M 150M 215M 200M

The initial capital outlay is 500M which will be depreciated over the four-year period. The prevailing tax rate is 30%. What is the Accounting Rate of Return (ARR)?

The company requires a benchmark ARR OF 40% and has considered taking the project with claims that it is profitable. Is this true/false?

Answer rating: 100% (QA)

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