A project of $650,000 is expected to generate the following cash flows over its useful life:
|Year||Cash outflow (N$)||Cash inflow (N$)|
|0 (initial investment)||650 000||0|
|6 Salvage Value||20 0000|
The project does not require any cash expenses. Depreciation is to be provided using straight line method. According to accounting policies of the company, the salvage value is treated as the reduction in depreciable basis.
Required: Compute accounting rate of return from the above information.
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