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Rockett Company is considering a business decision to invest in new equipment. The new equipment...

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Accounting

Rockett Company is considering a business decision to invest in new equipment. The new equipment is expected to cost $300,000. The new equipment is expected to have a useful life of 5 years and an estimated salvage value at the end of its useful life of $100,000. Net income is expected to increase by $60,000 each year for the next five years if it Rockett Company invests in the new equipment. Based on this information, what is the accounting rate of return on this investment?

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50%

20%

30%

25%

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