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Managerial Accounting

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Moderate

Vio After-Tax Accounting Rate of Return

MGRACT-ESR$RY

Vio Co. is subject to an effective tax rate of 20% and is contemplating a \$4,000,000 investment that will generate average before-tax cash flows of \$700,000 and average income before tax of \$640,000 over the next four years.

What is the after-tax accounting rate of return for this project?