Question content area top

Part $1$

HenryHenry

Hardware is adding a new product line that will require an investment of

$ $1$ comma $512$ comma $000$$$1,512,000.$

Managers estimate that this investment will have a$10-$year life and generate net cash inflows of

$ $310$ comma $000$$$310,000$

the first$$ year,

$ $270$ comma $000$$$270,000$

the second$$ year, and

$ $240$ comma $000$$$240,000$

each year thereafter for eight years. Assume the project has no residual value. Compute the ARR for the investment. Round to two places.

Question content area bottom

Part $1$

Select the$$ formula, then enter the amounts to calculate the ARR$($accounting rate of$$ return$)$ for the new product line.$($Round ARR to the nearest hundredth percent$[$two decimal$$ places$],$ X$.$XX$\%.)$

Average annual operating income

$$

Average amount invested

$=$

ARR

$$98,800$

$$

$$756,000$

$=$

$13\mathrm{.}07$

$\%$