Guerdon Ltd Is Reviewing a Project That Has an Initial

question 38

Multiple Choice

Guerdon Ltd is reviewing a project that has an initial outlay of $3m. The project will generate a cash inflow of $2m per annum. The project is expected to have a useful life of six years and a zero salvage value. This company uses straight-line depreciation. What is the average annual accounting rate of return on the initial total investment?

• A) 15%
• B) 20%
• C) 33%
• D) 50%

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Definitions:

Cerumen

A substance secreted in the ear canal, also known as earwax, that cleans and protects the ears.

Body Odor

A scent produced by the body, often arising from bacteria breaking down protein into acids in places like the armpits.

Excretion

The process by which metabolic waste products are eliminated from an organism to maintain homeostasis.

Immunity

The ability of an organism to resist and fight off infections and diseases through the action of specific antibodies or sensitized white blood cells.