Fantastic Oil Corporation is considering two alternatives for the installation of production equipment on the Panther well in the Odessa West field. Alpha costs $275,000 and Beta costs $350,000. The estimated net income generated from each is below:

REQUIRED: Using accounting rate of return, determine which alternative Fantastic should choose.

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Year Net Income Alpha Net Income Beta 1 $ 25,000 $ 50,000 2 25,000 50,000 3 25,000 50,000 4 25,000 50,000 5 25,000 50,000 6 25,000 30,000 7 25,000 30,000 8 25,000 30,000 9 25,000 30,000 10 25,000 30,000 11 25,000 15,000 12 25,000 15,000 13 25,000 15,000 14 25,000 15,000 15 25,000 15,000 Total $375,000 $475,000