A Level Accounting

Investment Appraisal Questions and Answers

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Question 1 of 5Investment appraisal

Project A has an initial outlay of $180 000 and an increase in working capital of$ 15 000. Its profits over its four-year life are $14 000,$ 10 000, $20 000 and$ 14 000. Using average annual profit divided by average investment (assuming a nil residual value), calculate the accounting rate of return (ARR), correct to two decimal places.

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