There are two second-hand 40 foot trucks which are being considered by John to deliver the goods to his customers. Details of the cash inflows for these trucks are as follows:

The Benz truck has an initial cost of 80,000 with a resale value after three years of 5,000 and the Hino truck has an initial cost of 90,000 with a resale value of 14,500 after three years. Both trucks would be depreciated evenly over their estimated useful economic lives. Use the information provided on the trucks to calculate and explain the Accounting Rate of Return investment appraisal technique.

Truck Benz Hino Year 1 Year 2 Year 3 48,000 34,000 28,000 050,000 140,000