The following data concerns a proposed equipment purchase:
|
Cost
|
$125,000
|
|
Salvage value
|
$3,000
|
|
Estimated useful life
|
4 years
|
|
Annual net cash flows
|
$45,100
|
|
Depreciation method
|
Straight-line
|
The annual average investment amount used to calculate the accounting rate of return is:
$62,500
$61,000
$31,250
$64,000
$39,950