The straight-line depreciation method would be used

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Lamar Company is studying a project that would have an eight year life and require a $1,600,000 investment in equipment. At the end of the eight years, the project would terminate and the equipment would have no salvage value. Below are estimates of the annual revenues and costs associated with the project for the eight-year period. Estimate annual sales revenue $3M Estimated annual variable costs, 60% of sales revenue Estimated annual fixed costs $700,000 The straight-line depreciation method would be used. The company requires an ARR of at least 18% on all investments. What is the ARR for this investment?

Reference no: EM131294983

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