Second Time Cinema, Inc., is a small company which produces movies for artists who have some prior experience in the film industry. Because of the high risk associated with these projects, the company will not accept projects that have an average Accounting Rate of Return of less than 25%. The company is considering three projects and requests your assistance in evaluating their potential given their projected cash flows. All of the initial investments are assets which have an estimated life of five years and will be depreciated on a straight-line basis.

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The Answer of Second Time Cinema, Inc., is a small company which produces movies for artists who have some prior experience in the film industry. Because of the high risk associated with these projects, the company will not accept projects that have an average Accounting Rate of Return of less than 25%. The company is considering three projects and requests your assistance in evaluating their potential given their projected cash flows. All of the initial investments are assets which have an estimated life of five years and will be depreciated on a straight-line basis.