3. Compute for Accounting Rate of return of A project of P650,000 is expected to generate the following cash flows over its useful life of 6 years: Year 1- P150,000, Year 2- P220,000, Year 3-...

3. Compute for Accounting Rate of return of A project of P650,000 is expected to generate the following<br>cash flows over its useful life of 6 years: Year 1- P150,000, Year 2- P220,000, Year 3- P300,000, Year<br>4-P250,000, Year 5- P180,000, Year 6- P112,000, and the salvage value of P20,000 treated as the<br>reduction in depreciable basis.<br>Solution:<br>Step 1: Computation of annual depreciation expenses:<br>Step 2: Computation of average annual income:<br>YEAR 1<br>YEAR 2<br>YEAR 3<br>YEAR 4<br>YEAR 5<br>YEAR 6<br>Cash Inflows<br>Depreciation<br>Net income<br>Average income%3D<br>Step 3: Computation of accounting rate of return:<br>

Extracted text: 3. Compute for Accounting Rate of return of A project of P650,000 is expected to generate the following cash flows over its useful life of 6 years: Year 1- P150,000, Year 2- P220,000, Year 3- P300,000, Year 4-P250,000, Year 5- P180,000, Year 6- P112,000, and the salvage value of P20,000 treated as the reduction in depreciable basis. Solution: Step 1: Computation of annual depreciation expenses: Step 2: Computation of average annual income: YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 Cash Inflows Depreciation Net income Average income%3D Step 3: Computation of accounting rate of return:

Jun 10, 2022

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3. Compute for Accounting Rate of return of A project of P650,000 is expected to generate the following cash flows over its useful life of 6 years: Year 1- P150,000, Year 2- P220,000, Year 3-...

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