Zoom Products is shopping for new equipment. Managers are considering two investments. Equipment…

Zoom Products is shopping for new equipment. Managers are considering two investments. Equipment…

Zoom Products is shopping for new equipment. Managers are considering two investments. Equipment manufactured by Miron costs $800,000 and will last for four years with no residual value. The Miron equipment will generate annual operating income of $156,000. Equipment manufactured by Root costs $1,100,000 and will remain useful for five years. It promises annual operating income of $236,500, and its expected residual value is $105,000. Which equipment offers the higher ARR?

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