Accounting Rate of Return : GIVEN : Asset cost = $4,000,000 with salvage value = to $800,000.
The asset is expected to generate the folling accounting net income from it’s projected 5 year service life ::
1-$250,000
2-$250,000
3-$150,000
4-$150,000
5- $200,000
Compute the ARR for the proposal :
IF WACC for the Corp = 9% , evaluate the proposal.
Give Advantage/Disadvantage of ARR method.