A potential project involves an initial investment in machinery of RO.1,000,000 and has the following cash inflows: Year 1 – RO.250,000 Year 2 – RO.350,000 Year 3 – RO.200,000 Year 4 – RO.400,000 At the end of year 4, the machinery will be sold for RO.600,000. Calculate the accounting rate of return based on average investment. NOTE (DEDUCT THE DEPRECIATION TO ARRIVE AT THE CORRECT AVERAGE PROFIT) a. None of the options b. 35% c. 20% d. 25% Clear my choice

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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A potential project involves an initial investment in machinery of RO.1,000,000 and has the following cash inflows:
Year 1 – RO.250,000
Year 2 – RO.350,000
Year 3 – RO.200,000
Year 4 – RO.400,000
At the end of year 4, the machinery will be sold for RO.600,000.
Calculate the accounting rate of return based on average investment.
NOTE
 (DEDUCT THE DEPRECIATION TO ARRIVE AT THE CORRECT AVERAGE PROFIT)
a.
None of the options
b.
35%
c.
20%
d.
25%
Clear my choice
 
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