Larry's Lanterns is considering a project which will produce sales of $240,000 a year for the next five years. The profit margin is estimated at 6 %. The project will cost $290,000 and be depreciated straight-line to a book value of zero over the life of the project. Larry's has a required accounting return of 8 %. This project should be _____ because the AAR is _____
A) Rejected; 4.14 %.
B) Rejected; 6 %.
C) Rejected; 8.28 %.
D) Accepted; 8.28 %.
E) Accepted; 9.93 %.

Question

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The Answer of Larry's Lanterns is considering a project which will produce sales of $240,000 a year for the next five years. The profit margin is estimated at 6 %. The project will cost $290,000 and be depreciated straight-line to a book value of zero over the life of the project. Larry's has a required accounting return of 8 %. This project should be _____ because the AAR is _____
A) Rejected; 4.14 %.
B) Rejected; 6 %.
C) Rejected; 8.28 %.
D) Accepted; 8.28 %.
E) Accepted; 9.93 %.

Larry's Lanterns Is Considering a Project Which Will Produce Sales