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7) O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,850,000. Under the
7) O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,850,000. Under the other proposal, the company wou focus on Kentucky and open 6 stores at a cost of $2,500,000. The following information is availabl Indiana proposal Kentucky proposal Required investment $1,850,000 $2,500,000 Estimated life 5 years 5 years Estimated residual value $40,000 $80,000 Estimated annual cash inflows over the next 10 years $600,000 $700,000 Required rate of return 14% 14% 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%.) A) 30.27%. B) 12.86%. C) 32.43%. D) 8.64%
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