The Depot Is Considering a Project with Annual Sales of $325,000

question 68

Multiple Choice

The Depot is considering a project with annual sales of $325,000 for four years.The profit margin is 4.65 percent.The initial cost for equipment will be $330,000.The equipment will be depreciated by $55,000 each year.The required average accounting rate of return is 11.4 percent.Should this project be accepted or rejected? What is the AAR?

• A)Rejected;6.52%
• B)Rejected;6.87%
• C)Rejected;7.85%
• D)Accepted;6.87%
• E)Accepted;7.85%

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