Homework Answers
a)
| Year | Incremental revenue | Incremental expenses | Incremental depreciation | Incremental profit |
| 1 | 50,000 | 20,000 | 16667 | 13,333 |
| 2 | 50,000 | 20,000 | 16667 | 13,333 |
| 3 | 50,000 | 20,000 | 16667 | 13,333 |
| 4 | 50,000 | 20,000 | 16667 | 13,333 |
| 5 | 50,000 | 20,000 | 16667 | 13,333 |
| 6 | 50,000 | 20,000 | 16667 | 13,333 |
b) Accounting rate of return = 13,333/ 100,000 = 13.33%
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