Dartis Company is considering investing in a specialized equipment costing $600,000. The equipment has a useful life of 5 years and a residual value of $60,000. Depreciation is calculated using the straight-line method. The expected net cash inflows from the investment are given below. What is the accounting rate of return on the investment?
|
Year 1
|
$200,000
|
|
2
|
150,000
|
|
3
|
160,000
|
|
4
|
95,000
|
|
5
|
75,000
|
|
$680,000
|