A certain project has an Average Accounting Return of .75 and incomes of 10,000, 50,000 and 30,000. What is the amount of the initial investment?
Accounting rate of return = Average accounting profit/Initial investment
0.75 = [($ 10,000 + $ 50,000 + $ 30,000)/3] / Initial investment
0.75 = [($ 10,000 + $ 50,000 + $ 30,000)/3] / Initial investment
0.75 = ($ 90,000/3)/ Initial investment
0.75 = $ 30,000/ Initial investment
Initial investment = $ 30,000/0.75 = $ 40,000
A certain project has an Average Accounting Return of .75 and incomes of 10,000, 50,000 and...
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