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5)Smith & Cramer, Computer Repair, is considering an investment in computer and network equipment costing...

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Accounting

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5)Smith & Cramer, Computer Repair, is considering an investment in computer and network equipment costing $240,000. This equipment would allow them to offer new programming services to clients. The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $50,000. Using the accounting rate of return model, what is the minimum average annual operating income that must be generated from this investment in order to achieve an 11% accounting rate of return? A) $5500 B) $20,900 C) $31,900 D) $26,400

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