#13

O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of

$ $1,800,000.

Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of

$ $2,000,000.

The following information is available:

	Indiana proposal	Kentucky proposal
Required investment	$ $1,800,000	$$2,000,000
Estimated life	10 years	10 years
Estimated residual value	$ $60,000	$ $50,000
Estimated annual cash inflows over the next 10 years	$$400,000	$$800,000
Required rate of return	11%	11%

The accounting rate of return for the Indiana proposal is closest to (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)