Smith & Cramer,Computer Repair,is Considering an Investment in Computer and Network

Smith & Cramer,Computer Repair,is considering an investment in computer and network equipment costing $254,000.This equipment would allow them to offer new programming services to clients.The equipment will be depreciated on the straight-line basis over an eight-year period with an estimated residual value of $60,000.Using the accounting rate of return model,what is the minimum average annual operating income that must be generated from this investment in order to achieve an 11% accounting rate of return?

A) $6,600
B) $21,340
C) $31,750
D) $27,940