Latimer Corporation Is Considering Two Alternative Investment Proposals with the Following

question 128

Multiple Choice

Latimer Corporation is considering two alternative investment proposals with the following data: $\begin{array}{|l|r|r|}\hline & \text { Proposal X } & \text { Proposal Y } \\\hline \text { Investment } & \$ 812,500 & \$ 390,000 \\\hline \text { Useful life } & 8 \text { years } & 8 \text { years } \\\hline \begin{array}{l}\text { Estimated annual net } \\\text { cash inflows for 8 years }\end{array} & \$ 125,000 & \$ 78,000 \\\hline \text { Residual value } & \$ 40,000 & \$ \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 14 \% & 10 \% \\\hline\end{array}$

- What is the accounting rate of return for Proposal X?

• A)3.50 %
• B)4.22 %
• C)15.38 %
• D)27.27 %

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Definitions:

Business Reports

Formal documents that provide analysis, evaluations, and insights regarding a company's performance, for stakeholders.

Instructional

Pertaining to or intended for instruction or teaching.

Condense

To make something dense or compact by reducing it in size or volume, often by summarizing content.

85 to 90 Percent

A numerical range expressing a portion, typically used to indicate a majority or a significant fraction of a whole.