A project has average net income of $2,100 a year over its 4-year life. The initial cost of the project is $65,000 which will be depreciated using straight-line depreciation to a book value of zero over
The life of the project. The ﬁrm wants to earn a minimal average accounting return of 8.5 percent.
The ﬁrm should _____ the project based on the AAR of _____
A) Accept; 6.46 percent.
B) Accept; 9.69 percent.
C) Accept; 12.92 percent.
D) Reject; 6.46 percent.
E) Reject; 12.92 percent.

Question

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The Answer of A project has average net income of $2,100 a year over its 4-year life. The initial cost of the project is $65,000 which will be depreciated using straight-line depreciation to a book value of zero over
The life of the project. The ﬁrm wants to earn a minimal average accounting return of 8.5 percent.
The ﬁrm should _____ the project based on the AAR of _____
A) Accept; 6.46 percent.
B) Accept; 9.69 percent.
C) Accept; 12.92 percent.
D) Reject; 6.46 percent.
E) Reject; 12.92 percent.

A Project Has Average Net Income of $2,100 a Year