Suppose Suzy Cake's Sweets is considering investing in a warehouse-management software that costs $550,000, has...
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Accounting
Suppose Suzy Cake's Sweets is considering investing in a warehouse-management software that costs $550,000, has $65,000 residual value, and should lead to cost savings of $125,000 per year for its five year life. Calculating the ARR, which of the following figures should be used as the equations denominator (average amount invested in the asset?)
A. $275,000
B. $615,000
C. $242,500
D. $307,500
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