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:

Permissive

A parenting style characterized by low demands with high responsiveness, where parents are generally lenient and allow significant self-regulation.

Negligent

Failing to take proper or appropriate care in doing something, often leading to harm or risk of harm.

Basic Trust

The belief in the reliability, truth, ability, or strength of someone or something, often considered a foundational element of secure relationships.

Responsive Parenting

A parenting approach that involves recognizing and appropriately responding to a child's needs, cues, and signals.