Your Firm Requires an Average Accounting Return (AAR)of at Least

question 43

Multiple Choice

Your firm requires an average accounting return (AAR) of at least 15 per cent on all fixed Asset purchases.Currently,you are considering some new equipment costing $96 000.This equipment will have a three-year life over which time it will be depreciated on a straight line basis to a zero book value.The annual net income from this project is estimated at $5500,$12 400,and $17 600 for the three years.Should you accept this project based on the accounting rate of return? Why or why not?

• A)yes;because the AAR is less than 15 per cent
• B)yes;because the AAR is equal to 15 per cent
• C)yes;because the AAR is greater than 15 per cent
• D)no;because the AAR is less than 15 per cent
• E)no;because the AAR is equal to 15 per cent

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Definitions:

Schizophrenia

A chronic and severe mental disorder that affects how a person thinks, feels, and behaves, characterized by delusions, hallucinations, and disordered thinking.

Inner City

Urban areas close to the downtown or central business district, often characterized by high-density living and sometimes socio-economic challenges.

Impoverished Area

A region characterized by a severe lack of economic resources and access to basic needs, affecting the quality of life of its inhabitants.

Wealthy Environment

An environment abundant in resources, opportunities, and material wealth, often contributing positively to personal development.