Flint Systems is considering investing in production-management software that costs $630,000, has $67,000 residual value, and leads to cost savings of $1,650,000 per year over its five-year life
Calculate the average amount invested in the asset that should be used for calculating the accounting rate of return.
A) $697,000
B) $630,000
C) $348,500
D) $67,000
C .C)
Average amount invested = (Amount invested + Residual value) / 2
= ($630,000 + $67,000 ) / 2
= $348,500
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