Overhill Company is considering an investment in a piece of equipment with a net initial investment of \$180,000. Annual cash increases in operations would be \$160,000 in Year 1, \$20,000 in Year 2, and \$90,000 in Year 3. The equipment’s useful life is 3 years, and has no salvage value at the end of its useful life. The company uses straight-line depreciation. Ignore income taxes.
Calculate the accounting rate of return using net initial investment.