Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (131,000) Project...

Transcribed Image Text:

Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (131,000) Project 2 $ (101,000) Salvage value 0 11,000 Annual income 16,375 14,560 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Required A Required B Compute accounting rate of return for each project. Accounting Rate of Return Project 1 Project 2 Numerator: 1 Denominator: = Accounting rate of return < Required A Required B > Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. < Required A Required B > Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (131,000) Project 2 $ (101,000) Salvage value 0 11,000 Annual income 16,375 14,560 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Required A Required B Compute accounting rate of return for each project. Accounting Rate of Return Project 1 Project 2 Numerator: 1 Denominator: = Accounting rate of return < Required A Required B > Required A Required B Based on accounting rate of return, which project is preferred? Based on accounting rate of return, is preferred. < Required A Required B >