The table below shows the profit after tax and the book value of investment for three projects A, B, and C Required: Calculate the Accounting Rate of Return (ARR) of the three projects and recommend the best option based on your calculation.
The table below shows the profit after tax and the book value of investment for three projects A, B, and C Required: Calculate the Accounting Rate of Return (ARR) of the three projects and recommend the best option based on your calculation.
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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Question
The table below shows the profit after tax and the book value of investment for three projects A, B, and C
Required:
Calculate the Accounting
Transcribed Image Text:Year 1
Year 2
Project
A
400,000
450,000
250,000
300,000
Year 3 500,000 500,000 400,000
Year 4
450,000
550,000 500,000
Year 5
500,000
300,000
Year 6
250,000
Project
B
300,000
450,000
-
Project
с
Project
A
Project
B
Project
с
1,500,000 1,200,000 1,000,000
1,350,000
1,080,000
900,000
1,215,000
972,000
810,000
1,093,500
874,800
729,000
787,320
656,100
590,000
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