An Investment Has an Initial Cost of $300,000 and a Life

question 94

Multiple Choice

An investment has an initial cost of $300,000 and a life of four years.This investment will be depreciated by $60,000 a year and will generate the net income shown below.Should this project be accepted based on the average accounting rate of return (AAR) if the required rate is 9.5 percent? Why or why not? $$\begin{array} { | c | r | } \hline \text { Year } & \text { Net Income } \\\hline 1 & \$ 14,500 \\\hline 2 & 16,900 \\\hline 3 & 19,600 \\\hline 4 & 23,700 \\\hline\end{array}$$

• A)Yes, because the AAR less than 9.5 percent
• B)Yes, because the AAR is 9.5 percent
• C)Yes, because the AAR is greater than 9.5 percent
• D)No, because the AAR is 9.5 percent
• E)No, because the AAR is greater than 9.5 percent

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Definitions:

Defined Roles

Specific, allocated functions or responsibilities assigned to individuals within a group or organization to facilitate effective operations.

Mutual Personality Conflict

A situation where individuals' personalities clash, leading to tensions and disagreements within personal or professional relationships.

Out-group

A group of individuals who are not part of the primary in-group, often perceived as different or outside the main group.

In-group

Refers to a group with which an individual identifies and feels a part of, often leading to a sense of belonging and loyalty.