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Gomez Corporation is considering two alternative investment proposals with the following data: Estimated annual net Investment Useful life cash inflows for 8 years Residual
Gomez Corporation is considering two alternative investment proposals with the following data: Estimated annual net Investment Useful life cash inflows for 8 years Residual value Depreciation method Required rate of return Proposal X $850,000 8 years $125,000 Proposal Y $ 468,000 8 years $ 78,000 $ 40,000 $ Straight-line 14% Straight-line 10% What is the accounting rate of return for Proposal Y? 4.17% 5.24% 16.67% 29.17%
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