A Project Requires an Investment of $40,000 in Equipment

question 108

Multiple Choice

A project requires an investment of $40,000 in equipment. Annual cash flows of $8,000 are expected to occur for the next eight years. No salvage value is expected. The company uses the straight-line method of depreciation with no mid-year convention. Ignore income taxes. The accounting rate of return on the original investment for the project is

• A)6.25%.
• B)7.50%.
• C)16.00%.
• D)20.00%.

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Definitions:

Improvise Fixes

The ability to quickly come up with solutions or workarounds in unexpected situations or when facing problems.

Marketplace Trends

Observations of general directions in which markets move, influenced by consumer behavior, technological advancements, and economic factors.

Prediscussion Polling

The practice of gauging opinions or attitudes of individuals before a discussion or meeting takes place.

Common Information Effect

The tendency for group members to focus on information that all members share, often at the expense of unique information held by individual members.