Question
O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,840,000. Under the
O'Mally Department Stores is considering two possible expansion plans. One proposal involves opening 5 stores in Indiana at the cost of $1,840,000. Under the other proposal, the company would focus on Kentucky and open 6 stores at a cost of $3,000,000. The following information is available: Required investment Estimated life Estimated residual value Estimated annual cash inflows over the next 9 years Required rate of return Indiana proposal Kentucky proposal $1,840,000 $3,000,000 9 years $40,000 $800,000 15% 9 years $70,000 $600,000 15% The accounting rate of return for the Kentucky proposal is closest to (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.) A. 15.00%. B. 10.96%. C. 15.70%. D. 26.67%. ...
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