Bill Joyner is evaluating a new ticketing system for his theater. The system will cost $309,200 and will save the theater $57,440 in annual cash operating costs. Bill expects the new system to last 10 years, at which time the system will have a salvage value of $25,000. If Bill purchases the new system, he will be able to sell his existing system for $14,000. Calculate the accounting rate of return for the proposed ticketing system.
a) accounting rate of return.
b) Bill Joyner wants to earn a minimum accounting rate of return of 9% on his projects. Should he invest in the new equipment?