A project has an initial cost of 35000 and a 3 year life The company uses

# A project has an initial cost of 35000 and a 3 year

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83. A project has an initial cost of \$35,000 and a 3-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is \$1,200, \$2,300, and \$1,800 a year for the next 3 years, respectively. What is the average accounting return? A. 8.72 percentB. 10.10 percentC. 11.26 percentD. 14.69 percentE. 15.14 percent9-26
Chapter 09 - Net Present Value and Other Investment Criteria 84. A project produces annual net income of \$46,200, \$51,800, and \$62,900 over its 3-year life, respectively. The initial cost of the project is \$675,000. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 14.5 percent? 85. A project has average net income of \$5,600 a year over its 6-year life. The initial cost of the project is \$98,000 which will be depreciated using straight-line depreciation to a book value of zero over the life of the project. The firm wants to earn a minimum average accounting return of 11.5 percent. The firm should _____ the project because the AAR is _____ percent. 86. Colin is analyzing a project and has gathered the following data. Based on this data, what is the average accounting rate of return? The project's assets will be depreciated using straight-line depreciation to a zero book value over the life of the project. 9-27
Chapter 09 - Net Present Value and Other Investment Criteria 87. You are analyzing the following two mutually exclusive projects and have developed the following information. What is the crossover rate? A. 13.17 percentB. 13.33 percentC. 14.32 percentD. 14.96 percentE. 15.20 percent 88. Boston Chicken is considering two mutually exclusive projects with the following cash flows. What is the crossover rate? If the required rate of return is lower than the crossover rate, which project should be accepted? 9-28
Chapter 09 - Net Present Value and Other Investment Criteria 89. You are analyzing a project and have gathered the following data:Based on the profitability index of _____ for this project, you should _____ the project. 9-29
Chapter 09 - Net Present Value and Other Investment Criteria

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