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

   Project A   Project B   Project C
Investment   $230,000   $54,000   $230,000
Residual value   0   12,000   36,000
Net cash flows:         
Year 1   56,000   38,000   94,000
Year 2   56,000   29,000   64,000
Year 3   56,000   25,000   74,000
Year 4   56,000   22,000   34,000
Year 5   56,000   0   0

What is the accounting rate of return for Project B? (Round your answer to two decimal places.)
A) 26.19%
B) 51.83%
C) 38.14%
D) 54.55%
Textbook 
Horngren's Financial & Managerial Accounting, The Financial Chapters

Horngren's Financial & Managerial Accounting, The Financial Chapters


Edition: 5th
Authors:
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7 years ago
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