Nelson Corp. is considering the purchase of a new piece of equipment.
The cost savings from the equipment would result in an annual increase in cash flow of $118,410. The equipment will have an initial cost of $476,000 and have a 5 year life. If the salvage value of the equipment is estimated to be $116,000, what is the accounting rate of return? Ignore income taxes.
Multiple Choice
7.25% 26.55% 9.75%. 24.88%
