Accounting rate of return of the project


Getaway Ltd is considering a project that involves acquiring a machine for $500,000 that is anticipated to generate $200,000 of revenue per year and $80,000 of expenses per year over its six year life. The machine is expected to have a residual value of $150,000 and is depreciated on a straight line basis. The firm's cost of capital is 8%. What is the Accounting Rate of Return of the project?

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Finance Basics: Accounting rate of return of the project
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