Dartis Tools Co What Is the Accounting Rate of Return on the Investment

question 77

Multiple Choice

Dartis Tools Co.is considering investing in specialized equipment costing $610,000.The equipment has a useful life of five years and a residual value of $69,000.Depreciation is calculated using the straight-line method.The expected net cash inflows from the investment are given below: $$\begin{array} { | r | r | } \hline \text { Year } 1 & \$ 210,000 \\\hline 2 & 159,000 \\\hline 3 & 160,000 \\\hline 4 & 95,000 \\\hline 5 & \underline { 136,000 } \\\hline & \$ 760,000 \\\hline\end{array}$$ What is the accounting rate of return on the investment? (Round your answer to two decimal places. )

• A)14.36%
• B)16.19%
• C)12.90%
• D)6.45%

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