A project requires a $2,800,000 initial investment for new machinery with a five-year life and a salvage value of $300,000.
The project is expected to yield annual income of $199,950 per year and net cash flows of $700,000 per year for the next five years.
The project’s accounting rate of return is: multiple choice
a. 6.5%.
b. 19.4%.
c. 22.6%.
d. 12.9%.
e. 45.2%.