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Presented is information pertaining to the cash flows of three mutually exclusive investment proposals: Proposal X Proposal Y Proposal Z Initial investment $69,000 $69,000 $69,000
Presented is information pertaining to the cash flows of three mutually exclusive investment proposals:
| Proposal X | Proposal Y | Proposal Z | |
|---|---|---|---|
| Initial investment | $69,000 | $69,000 | $69,000 |
| Cash flow from operations | |||
| Year 1 | 60,000 | 34,500 | 69,000 |
| Year 2 | 9,000 | 34,500 | |
| Year 3 | 33,500 | 33,500 | |
| Disinvestment | 0 | 0 | 0 |
| Life (years) | 3 years | 3 years | 1 year |
Assume Straight Line (Uniform) Depreciation.
What is the Accounting Rate of Return of Proposal X?
| A. | 17.18357 % | |
| B. | Zero | |
| C. | 14.18357 % | |
| D. | 15.18357 % | |
| E. | None of these choices |
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