Capitol Corp. management is expecting a project to generate after-tax income of $55,970 in each of the next three years. The average book value of the project’s equipment over that period will be $231,300. If the firm’s investment decision on any project is based on an ARR of 37.5 percent. (Round answer to 1 decimal places, e.g. 5.2%.)
What is the project’s accounting rate of return?
Accounting rate of return is %
Should the firm accept this project?
The firm should rejectaccep the project.