A Project Has Average Net Income of $4,160 a Year

question 44

Multiple Choice

A project has average net income of $4,160 a year over its 4-year life.The initial cost of the project is $65,000 which will be depreciated using straightline depreciation to a zero book value over the life of the project.The firm wants to earn a minimal average accounting return of 11.65 percent.Should the project be accepted or rejected? What is the AAR?

• A)Accepted;10.24%.
• B)Accepted;11.08%.
• C)Accepted;12.80%.
• D)Rejected;10.24%.
• E)Rejected;12.80%.

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Definitions:

Benefit

The advantage or positive impact that one receives from using a product, service, or undertaking an action, offering improvement or value.

Trial Close

A sales technique where the seller asks potential buyers questions that assume the sale has been made to gauge their readiness to complete the purchase.

Features And Benefits

Explanation highlighting product or service attributes (features) and how they fulfill users' needs or desires (benefits).

Psychological Need

An intrinsic motive or desire that drives individuals to pursue goals or activities that fulfill emotional or mental requirements.