url ht ACCT 202Routh Summer 2018 online l Mundy 7818 11SO A

url ht ACCT 202-Routh, Summer 2018 (online) l Mundy & 7/8/18 11:SO AM Test: Exam (Madule 6: ch. 12, 14) 01:55-22 Submit Test This Question: 3 pts 8 of 10 (0 complete This Test: 59 pts Siesta annual cash inflows of $20,000, what is the accounting rate of return? (Rounda g has asked you to evaluate a capital investment project. The project will require an initial investment of $59,000. The life of the is 5 years with a residual value of $1,000 If the project produces net ny intermediary calculations to the nearest dollar and your final answer to two decr al places X XX% OA. 14.24% B. 33 90% ° C. 2 95% OD, 13 90%

Solution

A. 14.24%

Annual depreciation expense = ($59,000 - $1,000 ) / 5 years = $11,600

Accounting rate of return = ($20,000 - $11,600) / $59,000 = 14.24%