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

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Definitions:

Debt to GDP Ratio

A measure of a country's debt compared to its Gross Domestic Product, indicative of the country's ability to pay back its debt.

Developed Nations

Countries with advanced industrial economies, high living standards, well-established infrastructures, and stable governments.

Federal Budget Deficit

The federal budget deficit occurs when a government's expenditures exceed its revenues within a given fiscal year, leading to borrowing to cover the gap.

Declined Substantially

A phrase indicating a significant decrease or reduction in the quantity, value, or quality of something.