McAfee Automobiles Manufacturing Is Considering Two Alternative Investment Proposals with the Following

question 27

Multiple Choice

McAfee Automobiles Manufacturing is considering two alternative investment proposals with the following data: $$\begin{array} { | l | r | r | } \hline & \text { Proposal } X & \text { Proposal Y } \\\hline \text { Investment } & \$ 11,800,000 & \$ 470,000 \\\hline \text { Useful life } & 5 \text { years } & 5 \text { years } \\\hline \text { Estimated annual net cash inflows for 5 years } & \$ 2,360,000 & \$ 103,000 \\\hline \text { Residual value } & \$ 58,000 & \$ 34,000 \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 12 \% & 10 \% \\\hline\end{array}$$ Calculate the accounting rate of return for Proposal Y.(Round any intermediate calculations and your final answer to two decimal places.)

• A) 16.10%
• B) 10.63%
• C) 6.27%
• D) 10.80%

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Definitions:

Nystagmus

Involuntary, rapid, and repetitive movement of the eyes, which can be horizontal, vertical, or rotary, and may indicate underlying neurological problems.

Rotational Movements

Movements around an axis, such as turning the head from side to side or rotating an arm at the shoulder.

Horizontal Acceleration

Acceleration of an object in a direction parallel to the earth’s surface.

Romberg Test

A clinical test of the body's sense of positioning (proprioception), used for diagnosing neurological function.