eBook Video Calculator Print Item Accounting Rate of Return Vanderhoort Company
ID: 2530552 • Letter: E
Question
eBook Video Calculator Print Item Accounting Rate of Return Vanderhoort Company invested $9,660,000 in a new product line. The life cycle of the product is projected to be seven years with the following net income stream: $360,000, $360,000, $600,000, $1,080,000, $1,200,000, $2,520,000, and $1,444,000 Required: Calculate the ARR. Enter your answer as a decimal, do not convert to a percent. Round your answer to two decimal places. Feedback Y Check My Work Average Net Income Investment Accounting Rate of Return Review the "How to Calculate the Accounting Rate of Return" example in the text.Explanation / Answer
Average net income = Sum of all cash flow / Life cycle of project
= $7564000 / 7
= $1080571.43
ARR= Average net income / Investment
= $1080571.43 / $ 9660000
= 0.112
Note - For doubt feel free to get in touch. Thanks :)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.