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The following data concerns a proposed equipment purchase:

Cost	$125,000
Salvage value	$3,000
Estimated useful life	4 years
Annual net cash flows	$45,100
Depreciation method	Straight-line

The annual average investment amount used to calculate the accounting rate of return is:

$62,500

$61,000

$31,250

$64,000

$39,950

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91748674

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