Henkle Company Is Considering a Project with an Initial Investment

question 67

Multiple Choice

Henkle Company is considering a project with an initial investment of $626,500 in new equipment that will yield annual net cash flows of $90,000 and will be depreciated at $55,000 per year over its nine-year life. What is the accounting rate of return on the investment?

• A) 5.59%
• B) 18.74%
• C) 31.27%
• D) 50.0%

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Definitions:

Nobles

Members of the highest social class in some societies, typically holding hereditary titles or offices.

Louis XIII

King of France from 1610 to 1643, whose reign saw the strengthening of royal power and the development of Absolutism in France, largely through the efforts of his minister, Cardinal Richelieu.

Mercantilists

Economic theorists and practitioners who advocated for mercantilism, a system promoting government regulation of a nation's economy for the purpose of augmenting state power at the expense of rival national powers.

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Activities performed to satisfy the needs or desires of others, which can range from manual labor to intellectual or artistic output.