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Compute the accounting rate of return

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Question: On 1/1/18, Beach Boys Photographers invested in new camera equipment costing $16,000. The equipment is expected to yield the following amounts per year for its four-year intended life:

Cash Revenues $28,000

Cash Expenses 15,000

The cost of capital is 14 percent; there is no salvage value at the end of four years and straight line depreciation is used. Ignore taxes. For 2018, compute the accounting rate of return based on the initial investment.

Reference no: EM132760029

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