Umm purpose I’m guessing , if It’s wrong then I’m so sorry
India’s geography contributed to its isolation from the rest
of Asia. It is a peninsula but on the North, the Himalayas shields it from
invasion of both men and ideas. On the East there are dense forests that
although have lower height, is infested with malaria. Great oceans surround the
south and mountain ranges that are difficult to traverse block the West. As a
result, the Indian community developed its caste system, the most elaborate
expression in history of an unmoving agricultural society.
Based on the projected net incomes and cost of purchasing the equipment, the average accounting rate of return is 12.5%.
<h3>How can we find the average accounting rate of return?</h3>
This can be found as:
= Average cashflows / Average investment
Average cashflows are:
= (7,200 + 11,300 + 14,100 + 20,000) / 4
= $13,150
Average investment is:
= 210,000 / 2
= $105,000
The average accounting rate of return is:
= 13,150 / 105,000
= 12.5%
The new equipment should not be bought if the required AAR is 12% because it would be less than the AARR.
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