A Project Produces Annual Net Income of $9,500, $12,500, and $15,500

question 83

Multiple Choice

A project produces annual net income of $9,500, $12,500, and $15,500 over the three years of its life, respectively. The initial cost of the project is $260,400. 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 7 %?

• A) 4.80 %
• B) 7.32 %
• C) 8.97 %
• D) 9.60 %
• E) 10.27 %

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Definitions:

Fault

An error or malfunction in a system, particularly in electrical or mechanical systems, indicating a deviation from normal operation.

MIL Light

Also known as the "Check Engine" light, an indicator on a vehicle's dashboard that alerts the driver to potential malfunctions within the engine or exhaust systems.

Trouble Codes

Codes generated by a vehicle's onboard diagnostics system indicating specific system errors or malfunctions for troubleshooting.

Malfunction Indicator Light

A warning light on a vehicle's dashboard that illuminates when the engine management system detects a problem.