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Qs on ARR


By Anonymous - Posted on 13 June 2012

Can someone explain the answers of below 2

A company invested $60,000 in purchasing a machine. The company will generated a cash flow of $30,000 per year for 3 years. What is the accounting rate of return ?
i. 50%
ii. 33.33%
iii. 150%
iv. None of the above

A company invested $60,000 in purchasing a machine. The company will generated a cash flow of $30,000 per year for 3 years. The residual value of the machine after 3 years will be $10,000.
 What is the accounting rate of return ?
i. 50%
ii. 38%
iii. 55.55%
iv. None of the above
 

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