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

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

Question

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

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

Quizplus · Accepted Answer

B) 11ea8a42_4fc6_4624_8b44_cf24ad68c196_TB5024_00 *Average amount invested = (Amount invested + Residual value)/ 2
ARR of Project C = Average annual operating income / Average amount invested
ARR = $9,000 / $119,000 = 7.56%

A Company Is Evaluating Three Possible Investments