Landrum Corporation is considering investing in specialized equipment costing $ 260 comma 000. The equipment has a useful life of 5 years and a residual value of $ 15 comma 000. Depreciation is calculated using the straightminusline method. The expected net cash inflows from the investment are: Year 1 $ 60 comma 000 Year 2 $ 90 comma 000 Year 3 $ 110 comma 000 Year 4 $ 40 comma 000 Year 5 $ 25 comma 000 Total cash inflows $ 325 comma 000 Landrum Corporation's required rate of return on investments is 20 %. What is the accounting rate of return on the investment? A. 4.92 % B. 6.15 % C. 18.85 % D. 25.00 %
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Home » Business » Landrum Corporation is considering investing in specialized equipment costing $ 260 comma 000. The equipment has a useful life of 5 years and a residual value of $ 15 comma 000. Depreciation is calculated using the straightminusline method.