A company is evaluating three possible investments. Each uses the straightminusline method of depreciation. Following information is provided by the company: Project A Project B Project C Investment $ 228 comma 000 $ 54 comma 000 $ 228 comma 000 Residual value 0 16 comma 000 30 comma 000 Net cash inflows: Year 1 66 comma 000 36 comma 000 100 comma 000 Year 2 66 comma 000 27 comma 000 70 comma 000 Year 3 66 comma 000 23 comma 000 80 comma 000 Year 4 66 comma 000 20 comma 000 40 comma 000 Year 5 66 comma 000 0 0 What is the accounting rate of return for Project B? (Round your answer to two decimal places.)

the accounting rate of return for Project B is 74.29 % (2.dp)

Explanation:

Accounting Rate of Return = Average Profit/Average Investment × 100

Average Profit for Project B

Average Profit = Sum of Profit/Number of Years

                        = (36,000+27,000+23,000+20,000)/4

                        = 106,000 / 4

                        =  26,000

Average Investment for Project B

Average Investment = (Initial Investment + Scrap Value) / 2

                                  = (54,000 +16,000) / 2

                                  = 35,000

Accounting Rate of Return for Project B

Accounting Rate of Return = 26,000/35,000 × 100

                                            = 74.29 % (2.dp)

e would be the answer

disadvantages of leasing a vehicle: no vehicle equity and mileage limitations

disadvantages of purchasing a vehicle: large down payment and vehicle depreciation

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