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9. Giessen Construction Company is considering purchasing new equipment costing SAR 3,250,0 company's management has estimated that the equipment will generate cash flows as follows Year 1 2 3 4 980,000 875,000 850,000 750,000 The company's required rate of return is 9%. Calculate the accounting rate of return, assuming value of SAR 250,000. a. 7.22% b. 8.45% c. SAR 90,000 6.50%

9. Giessen Construction Company is considering purchasing new equipment costing SAR 3,250,0 company's management has estimated that the equipment will generate cash flows as follows Year 1 2 3 4 980,000 875,000 850,000 750,000 The company's required rate of return is 9%. Calculate the accounting rate of return, assuming value of SAR 250,000. a. 7.22% b. 8.45% c. SAR 90,000 6.50%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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9. Giessen Construction Company is considering purchasing new equipment costing SAR 3,250,000. The company's management has estimated that the equipment will generate cash flows as follows (SAR): Year 1 3 4 980,000 875,000 850,000 750,000 The company's required rate of return is 9%. Calculate the accounting rate of return, assuming a salvage value of SAR 250,000. a. 7.22% b. 8.45% c. SAR 90,000 6.50%
Transcribed Image Text:9. Giessen Construction Company is considering purchasing new equipment costing SAR 3,250,000. The company's management has estimated that the equipment will generate cash flows as follows (SAR): Year 1 3 4 980,000 875,000 850,000 750,000 The company's required rate of return is 9%. Calculate the accounting rate of return, assuming a salvage value of SAR 250,000. a. 7.22% b. 8.45% c. SAR 90,000 6.50%
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