Question
A company is evaluating three possible investments. Each uses the straight-line method of depreciation. The following information is provided by the company: Project A Project
A company is evaluating three possible investments. Each uses the straight-line method of depreciation. The following information is provided by the company:
| Project A | Project B | Project C | |
| Investment | $240,000 | $54,000 | $240,000 |
| Residual value | 0 | 10,000 | 36,000 |
| Net cash flows: | |||
| Year 1 | 52,000 | 40,000 | 96,000 |
| Year 2 | 52,000 | 31,000 | 66,000 |
| Year 3 | 52,000 | 27,000 | 76,000 |
| Year 4 | 52,000 | 24,000 | 36,000 |
| Year 5 | 52,000 | 0 | 0 |
What is the accounting rate of return for Project C? (Round your answer to two decimal places.)
A.12.50%
B.15.00%
C.44.44%
D.12.68%
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Fundamentals Of Information Risk Management Auditing An Introduction For Managers And Auditors
Authors: Chris Wright
1st Edition
978-1849288156
