Calculation question :
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Calculation question :
A project involves the immediate purchase of plant at a cost of £110,000.It wuold generate annual profit of £4,000 for five years.Scrap value will be £10,000 at the end of the fifth year.
Requirement
Calculate the ARR using the initial and average investment.
A project involves the immediate purchase of plant at a cost of £110,000.It wuold generate annual profit of £4,000 for five years.Scrap value will be £10,000 at the end of the fifth year.
Requirement
Calculate the ARR using the initial and average investment.
initial investment 110,000dollars
average investment(110,000-4000*5-10,000)/5=16,000dollars
average investment(110,000-4000*5-10,000)/5=16,000dollars
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