A company is evaluating three possible investments.Each uses the straight-line method of depreciation.Following information is provided by the company:

What is the accounting rate of return for Project B? (Round your answer to two decimal places. )

Question

A company is evaluating three possible investments.Each uses the straight-line method of depreciation.Following information is provided by the company:

What is the accounting rate of return for Project B? (Round your answer to two decimal places. )

Quizplus · Accepted Answer

C)
 11ea86ed_2acd_4c5e_8b27_7bbbefd043ca_TB3056_00 *Average amount invested = (Amount invested + Residual value)/ 2
ARR of Project B = Average annual operating income / Average amount invested
ARR = $18,000 / $33,000 = 54.55% (Rounded)

A Company Is Evaluating Three Possible Investments