A 5-year project requires $65,000 of fixed assets that will be depreciated using straight-line depreciation to a zero book value over the life of the project.If the firm requires a minimum average accounting return of 11.65 percent,what must be the minimum average net income for the project to be accepted?
A)$7,572.50
B)$8,001.29
C)$3,786.25
D)$4,029.14
E)$5,504.73

Question

Quizplus · Accepted Answer

AAR = .1165 = Average net income / ($65,000 + 0)/ 2
Average net income = $3,786.25

A 5-Year Project Requires $65,000 of Fixed Assets That Will