Delta Mu Delta Is Considering Purchasing Some New Equipment Costing

question 110

Multiple Choice

Delta Mu Delta is considering purchasing some new equipment costing $393,000.The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project.Projected net income for the four years is $16,900, $25,300, $27,700, and $18,400.What is the average accounting rate of return?

• A)11.23 percent
• B)11.63 percent
• C)12.01 percent
• D)12.49 percent
• E)10.87 percent

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