The Nifty Fifty Is Considering Opening a New Store at a Start-Up

question 72

Multiple Choice

The Nifty Fifty is considering opening a new store at a start-up cost of $628,000.The initial investment will be depreciated straight-line to zero over the 15-year life of the project.What is the average accounting rate of return given the following net income projections? $$\begin{array} { | c | r | } \hline \text { Years } & \text { Net Income } \\\hline 1 - 6 & \$ 58,000 \\\hline 6 - 10 & 52,000 \\\hline 11 - 15 & 44,000 \\\hline\end{array}$$

• A)16.42 percent
• B)16.68 percent
• C)17.01 percent
• D)17.18 percent
• E)16.35 percent

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Definitions:

Cramming

The practice of intensively studying or memorizing information in a short period, usually immediately before an examination.

Spacing Effect

A phenomenon in which learning is enhanced when study sessions are spaced out over time rather than crammed in a short period.

Anterograde Amnesia

A loss of the ability to create new memories after the event that caused the amnesia, leading to an inability to recall the recent past, while long-term memories from before the event remain intact.