A Project Has an Initial Cost of £38,000 and a Four-Year

question 43

Multiple Choice

A project has an initial cost of £38,000 and a four-year life.The company usesstraight-line depreciation to a book value of zero over the life of the project.The projected net income from the project is £1,000,£1,200,£1,500,and £1,700 a year for the next four years,respectively.What is the average accounting return?

• A)3.55%
• B)4.13%
• C)4.28%
• D)7.11%
• E)14.21%

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Definitions:

Accounts Receivable Turnover

A financial metric that measures the efficiency with which a company collects on its receivables or the credit it extends to customers by calculating the number of times receivables are turned over during a given period.

Acceleration

The rate at which an object's velocity changes over time, often measured in meters per second squared in the physical sciences or in speeding up processes within various fields.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency of the business.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to fund operations.