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Year       Edinburgh(inflows)         Cumulative Inflows         Newcastle(inflows)         Cumulative Inflows 1              3,780                                                3,780                               3,500                                              3,500 2              4,150                                     7,930                          3,850                                            7,350 3              4,550                                                12,480                             4,200                                           11,550 4              5,120                                                 17,600                            5,150                                           16,700 5              4,900                                               22,500                              4,950                                           21,650 Initial Investments of Edinburgh : 8 700+4 100=12 800 Initial Investments of Newcastle Upon Tyne: 7 950+3 890=11 840 calculate the accounting rate of return for both contracts. assume that the only difference between cash flow and profit is the depreciation charge.

Year       Edinburgh(inflows)         Cumulative Inflows         Newcastle(inflows)         Cumulative Inflows 1              3,780                                                3,780                               3,500                                              3,500 2              4,150                                     7,930                          3,850                                            7,350 3              4,550                                                12,480                             4,200                                           11,550 4              5,120                                                 17,600                            5,150                                           16,700 5              4,900                                               22,500                              4,950                                           21,650 Initial Investments of Edinburgh : 8 700+4 100=12 800 Initial Investments of Newcastle Upon Tyne: 7 950+3 890=11 840 calculate the accounting rate of return for both contracts. assume that the only difference between cash flow and profit is the depreciation charge.

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
Section: Chapter Questions
Problem 1PS
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Year       Edinburgh(inflows)         Cumulative Inflows         Newcastle(inflows)         Cumulative Inflows

1              3,780                                                3,780                               3,500                                              3,500

2              4,150                                     7,930                          3,850                                            7,350

3              4,550                                                12,480                             4,200                                           11,550

4              5,120                                                 17,600                            5,150                                           16,700

5              4,900                                               22,500                              4,950                                           21,650

Initial Investments of Edinburgh :

8 700+4 100=12 800

Initial Investments of Newcastle Upon Tyne:

7 950+3 890=11 840

calculate the accounting rate of return for both contracts. assume that the only difference between cash flow and profit is the depreciation charge.

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