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

question 266

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 percent?

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

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Definitions:

Ethical

Pertaining to or dealing with morals, principles of morality concerning right and wrong behavior.

Competition

Competition involves the rivalry between entities, such as businesses or individuals, striving for a common goal, such as market dominance or recognition, driving innovation and improvements.

Conditions

The circumstances or factors affecting the way in which people live or work, especially with regard to their safety or well-being.

Bounded Ethicality

The concept that cognitive biases and organizational contexts limit individuals’ ability to make ethically ideal decisions.