Calculate the profitability of the following proposal using Average rate of return (ARR) method Proposal I  Automatic machine Cost OMR 420000 Estimated life   6.5 years Estimated sales P.A OMR 175000 Cost : Material  OMR 60000 Labour OMR 22000 Variable overheads OMR 14000

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter14: Capital Structure Management In Practice
Section14.A: Breakeven Analysis
Problem 7P
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Calculate the profitability of the following proposal using Average rate of return (ARR) method
Proposal I  Automatic machine Cost OMR 420000
Estimated life   6.5 years
Estimated sales P.A OMR 175000
Cost : Material  OMR 60000
Labour OMR 22000
Variable overheads OMR 14000
a.
16.53%
b.
All the options are wrong
c.
3.42%
d.
4.62%
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