Colin Is Analyzing a Project and Has Gathered the Following

question 50

Multiple Choice

Colin is analyzing a project and has gathered the following data.Based on this data,what is the average accounting rate of return? The project's assets will be depreciated using straight-line depreciation to a zero book value over the life of the project. $$\begin{array} { c r r } \frac { \text { Year } } { 0 } & \frac { \text { Cash Flow } } { } & \text { Net Income } \\1 & - \$ 285,000 & \text { n/a } \\2 & \$ 83,650 & \$ 12,400 \\3 & \$ 92,850 & \$ 21,600 \\4 & \$ 94,350 & \$ 23,100 \\& \$ 93,250 & \$ 22,000\end{array}$$

• A)6.94 percent
• B)13.88 percent
• C)15.66 percent
• D)27.75 percent
• E)31.31 percent

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