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Spring Company is considering investing in a new piece of equipment. It will cost $400,000...

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Accounting

Spring Company is considering investing in a new piece of equipment. It will cost $400,000 and is expected to have a $20,000 residual value. The new equipment is expected to provide a cost savings of $100,000 per year over its five-year life.

What is the average amount invested in the asset that should be used for calculating the accounting rate of return? Show and label your work.

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