A Project Has an Initial Cost of $61,000 and a 5-Year

question 271

Multiple Choice

A project has an initial cost of $61,000 and a 5-year life. The company uses straight-line depreciation to a zero book value over the life of the project. The projected net income from the
Project is $1,500, $1,600, $1,900, $2,100, and $2,200 a year for the next five years, respectively.
What is the average accounting rate of return?

• A) 6.10 percent
• B) 7.62 percent
• C) 7.97 percent
• D) 8.48 percent
• E) 9.42 percent

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Definitions:

Similarity

The state of being alike or having attributes in common, often used in various contexts such as psychology, mathematics, and everyday comparisons.

Sensory Adaptation

Tendency of sensory receptor cells to become less responsive to a stimulus that is unchanging.

Sensory Receptors

Specialized cells or structures in organisms that detect and respond to external stimuli from the environment, such as light, sound, and pressure.

Light Waves

Light Waves are electromagnetic waves that are visible to the human eye, responsible for the sensation of sight and varying in wavelength to produce different colors.