A Project Has Average Net Income of $2,100 a Year

question 86

Multiple Choice

A project has average net income of $2,100 a year over its 4-year life. The initial cost of the project is $65,000 which will be depreciated using straight-line depreciation to a book value of zero over the life of the project. The firm wants to earn a minimal average accounting return of 8.5 %. The firm should _____ the project based on the AAR of _____

• A) Accept; 6.46 %.
• B) Accept; 9.69 %.
• C) Accept; 12.92 %.
• D) Reject; 6.46 %.
• E) Reject; 12.92 %.

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Definitions:

External Factors

Influences that originate outside an individual or system, affecting their behavior and outcomes.

Social Roles

The parts individuals play as members of a social group, which meet the expectations of society.

Better Adjusted

Describes individuals who are more effectively adapted to their social, emotional, or psychological environment.

Self-Esteem

An individual's subjective evaluation of their own worth and capabilities.