What is the accounting rate of return


Summit Corp is considering the purchase of a new piece of equipment. The cost savings from the equipment would result in an annual increase in net income after tax of $161,200. The equipment will have an initial cost of $520,000 and have a 7 year life. If the salvage value of the equipment is estimated to be $16,000, what is the accounting rate of return?

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Accounting Basics: What is the accounting rate of return
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