A Project Has an Initial Cost of $31,300 and a Three-Year

question 37

Multiple Choice

A project has an initial cost of $31,300 and a three-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $1,750, $2,100, and $1,700 a year for the next three years, respectively. What is the average accounting return?

• A) 12.79 percent
• B) 11.82 percent
• C) 10.35 percent
• D) 11.69 percent
• E) 10.14 percent

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