Delta Mu Delta is considering purchasing some new equipment costing $400,000.The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project.Projected net income for the four years is $18,900,$21,300,$26,700,and $25,000.What is the average accounting rate of return?
A)11.49 percent
B)11.63 percent
C)12.01 percent
D)12.49 percent
E)13.20 percent

Question

Quizplus · Accepted Answer

AAR = [($18,900 + $21,300 + $26,700 + $25,000)/4]/[($400,000 + $0)/2] = 11.49 percent

Delta Mu Delta Is Considering Purchasing Some New Equipment Costing