A Project Produces Annual Net Income of $14,600, $18,700, and $23,500

question 362

Multiple Choice

A project produces annual net income of $14,600, $18,700, and $23,500 over three years, respectively. The initial cost of the project is $310,800. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 9 %?

• A) 12.18 %
• B) 14.29 %
• C) 15.63 %
• D) 17.67 %
• E) 18.28 %

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