Dartis Tools Co What Is the Accounting Rate of Return on the Investment

Dartis Tools Co.is considering investing in specialized equipment costing $670,000.The equipment has a useful life of five years and a residual value of $61,000.Depreciation is calculated using the straight-line method.The expected net cash inflows from the investment are given below: $$\begin{array} { | r | r | } \hline \text { Year } 1 & \$ 201,000 \\\hline 2 & 159,000 \\\hline 3 & 163,000 \\\hline 4 & 100,000 \\\hline 5 & \underline { 157,000 } \\\hline & \$ 780,000 \\\hline\end{array}$$ What is the accounting rate of return on the investment? (Round your answer to two decimal places.)

A) 10.21%
B) 11.23%
C) 9.36%
D) 4.68%

Correct Answer:

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