Response to the following problem:
Engineered Products is shopping for new equipment. Managers are considering two investments. Equipment manufactured by Atlas Inc., costs $1,000,000 and will last for five years, with no residual value. The Atlas equipment is expected to generate annual operating income of $160,000. Equipment manufactured by Veras Co. is priced at $1,200,000 and will remain useful for six years. It promises annual operating income of $240,500, and its expected residual value is $100,000.
Which equipment offers the higher accounting rate of return?