** This question was previously posted, and I followed the example and got it wr

Question

**This question was previously posted, and I followed the example and got it wrong. Please help and explain step by step the calculations. Thanks in advance! :-)

A project requires an immediate investment of $64792 in some new equipment with an estimated useful life of 10 years and no salvage value. If predicted annual savings or cash operating expenses are $11889, what is the accounting rate of return based on the original investment? input your answer to two decimal places, for example .12348 would be input as 12.35

Explanation / Answer

Annual Depreciation = (Initial Investment Scrap Value) ÷ Useful Life in Years
Annual Depreciation = ($64,792 $0) ÷ 10 $64792.20

Average Accounting Saving = Annual Saving Annual Depreciation

Average Accounting Saving = $11889 $6479.20 = $5409.80

Accounting Rate of Return = Investment ÷ Average Accounting Saving /100 11.98%

Accounting Rate of Return = $64,792 ÷ $5409.80/100 11.98%

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