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) 11ea8a42_4fc6_1f12_8b44_87e69c95bc9b_TB5024_00 *Average amount invested = (Amount invested + Residual value)/ 2
ARR of Project B = Average annual operating income / Average amount invested
ARR = $4,000 / $31,000 = 12.90% (Rounded)

A Company Is Evaluating Three Possible Investments