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A potential project involves an initial investment in machinery of RO.1,000,000 and has the following...

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Accounting

A potential project involves an initial investment in machinery of RO.1,000,000 and has the following cash inflows: Year 1 RO.250,000 Year 2 RO.350,000 Year 3 RO.200,000 Year 4 RO.400,000 At the end of year 4, the machinery will be sold for RO.400,000.

Calculate the accounting rate of return(ARR) based on average investment.

Note ( Deduct the depreciation to arrive at the correct average profit)

a.

15%

b.

14.72%

c.

None of the options

d.

21.43%

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