Simms Manufacturing Is Considering Two Alternative Investment Proposals with the Following

question 6

Multiple Choice

Simms Manufacturing is considering two alternative investment proposals with the following data:
$\begin{array}{|l|r|r|r|}\hline &\text { Proposal X } & \text { Proposal Y } \\ \hline \text { Investment } & \$ 620,000 & \$ 400,000 \\\hline \text { Useful life } & 8 \text { years } & 8 \text { years } \\\hline \text { Estimated annual net cash inflows for 8 years } & \$ 130,000 & \$ 80,000 \\\hline \text { Residual value } & \$ 60,000 & \$ 0 \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 14 \% & 10 \%\\\hline \end{array}$


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What is the accounting rate of return for Proposal Y?

• A) 15.0%
• B) 16.0%
• C) 20.0%
• D) 40.0%

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Definitions:

Inconsistent

Lacking compatibility or uniformity in action, behavior, or results.

Logic of Statements

The study of principles and methods for distinguishing good reasoning from bad reasoning through the analysis of statements.

Moral Principles

Moral principles are fundamental beliefs or values that guide behavior by distinguishing right from wrong and setting standards for ethical conduct.

Behavioral Ideals

Principles or standards of behavior considered desirable or exemplary within a society or group.