Symphony Limited is evaluating a proposed capital investment project. The initial investment will be 900,000 and...

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Symphony Limited is evaluating a proposed capital investment project. The initial investment will be £900,000 and the company operates a straight-line depreciation policy. The initial investment will have a residual value of £100,000 when the project comes to an end in 5 years' time. The cash flow from the project will be £200,000 in year 1, £300,000 in year 2, £400,000 in year 3, £350,000 in year 4 and £250,000 in year 5. What is the accounting rate of return of this project? (4 marks) Symphony Limited is evaluating a proposed capital investment project. The initial investment will be £900,000 and the company operates a straight-line depreciation policy. The initial investment will have a residual value of £100,000 when the project comes to an end in 5 years' time. The cash flow from the project will be £200,000 in year 1, £300,000 in year 2, £400,000 in year 3, £350,000 in year 4 and £250,000 in year 5. What is the accounting rate of return of this project? (4 marks)

Answer rating: 100% (QA)

The accounting rate of return ARR is a financial metric used to evaluate the profitability of an in... View the full answer