A Project Has Average Net Income of $2,100 a Year

question 34

Multiple Choice

A project has average net income of $2,100 a year over its 4-year life.The initial cost of the project is $65,000 which will be depreciated using straight-line depreciation to a book value of zero over the life of the project.The firm wants to earn a minimal average accounting return of 8.5%.The firm should _____ the project based on the AAR of ____.

• A)accept; 6.46%.
• B)accept; 9.69%.
• C)accept; 12.92%.
• D)reject; 6.46%.
• E)reject; 12.92%.

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Definitions:

Therapeutically

Pertaining to the treatment, alleviation, or prevention of disease; aimed at healing or providing therapy.

Contrast Medium

A substance used in medical imaging examinations to improve the visibility of internal body structures in the resulting images.

Common Bile Duct

Duct that carries bile to the duodenum. It is formed from the merger of the cystic and hepatic ducts.

Cholangiography

A test that evaluates the function of the bile ducts by injection of a contrast medium directly into the common bile duct (during gallbladder surgery) or through a T-tube (after gallbladder surgery or during radiologic testing) and taking an X-ray.