Williams Company is evaluating a new project. The project will cost $300,000 and have a 10-year life. Annual revenues will be $200,000 and annual operating expenses, including amortization, will be $188,000. The terminal value is $20,000, and the company requires a 16% rate of return. Ignore income taxes.
Compute the accrual accounting rate of return.

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The Answer of Williams Company is evaluating a new project. The project will cost $300,000 and have a 10-year life. Annual revenues will be $200,000 and annual operating expenses, including amortization, will be $188,000. The terminal value is $20,000, and the company requires a 16% rate of return. Ignore income taxes.
Compute the accrual accounting rate of return.

Williams Company Is Evaluating a New Project