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A project has average net income of $6,250 a year over its 5-year life. The initial cost of the project is $107,400 which will be
A project has average net income of $6,250 a year over its 5-year life. The initial cost of the project is $107,400 which will be depreciated using straight-line depreciation to a book value of zero over the life of the project. The firm wants to earn a minimum average accounting return of 11.5 percent. The firm should _____ the project because the AAR is _____ percent. |
Accept; 5.71 |
Accept; 9.90 |
Accept; 11.64 |
Reject; 9.90 |
Reject; 11.64 |
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