The Green Fiddle Is Considering a Project That Will Produce

question 82

Multiple Choice

The Green Fiddle is considering a project that will produce sales of $87,000 a year for the next 4 years.The profit margin is estimated at 6 percent.The project will cost $90,000 and will be depreciated straight-line to a book value of zero over the life of the project.The firm has a required accounting return of 11 percent.This project should be _____ because the AAR is _____ percent.

• A)rejected; 10.03
• B)rejected; 10.25
• C)rejected; 11.60
• D)accepted; 10.25
• E)accepted; 11.60