Question
A company is evaluating three possible investments. Each uses the straight - line method of depreciation. The following information is provided by the company: Investment:
A company is evaluating three possible investments. Each uses the straight - line method of depreciation. The following information is provided by the company:
Investment: $212,000
Salvage Value: $30,000
Net Cash Flows
Year 1: $86,000
Year 2: $56,000
Year 3: $66,000
Year 4: $26,000
Year 5: $0
What is the accounting rate of return?
A) 14.15%
B) 12.26%
C) 10.74%
D) 26.92%
Step by Step Solution
3.38 Rating (151 Votes )
There are 3 Steps involved in it
Step: 1
A 1415 Explanation Average returns Average net cas...
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Managing Controlling and Improving Quality
Authors: Douglas C. Montgomery, Cheryl L. Jennings, Michele E. Pfund
1st edition
471697915, 978-0471697916
