Problem:
Doorstep Cleaners is considering whether to purchase a delivery truck that will cost $50,000, last six years, and have an estimated residual value of $5,000. Average annual net income from the delivery service is estimate to be $4,000. Doorstep cleaners' owners seek to earn an accounting rate of return of 10%.
Required:
Question: Compute the average investment cost and the accounting rate of return. (round % to one decimal place.) Should the investment be made?
Note: Provide support for your rationale.