A project requires a $2,800,000 initial investment for new machinery with a five-year life and a salvage value of $300,000. The project is expected to yield annual income of $199,950 per year and net cash flows of $700,000 per year for the next five years. The projects accounting rate of return is:

Multiple Choice

• 22.6%.

• 6.5%.

• 12.9%.

• 19.4%.

• 45.2%.