The Following Data Concerns a Proposed Equipment Purchase Assuming That Net Cash Flows Are Received Evenly Throughout the l

question 107

Multiple Choice

The following data concerns a proposed equipment purchase:
$$\begin{array} { l r } \text { Cost } & \$ 278,000 \\\text { Salvage value } & \$ 6,000 \\\text { Estimated useful life } & 8 \text { years } \\\text { Annual net cash flows } & \$ 46,360 \\\text { Depreciation method } & \text { Straight-line }\end{array}$$
Assuming that net cash flows are received evenly throughout the year, the accounting rate of return is:

• A) 34.09%.
• B) 32.64%.
• C) 8.35%.
• D) 8.70%.
• E) 16.67%.

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