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.
A)accept; 5.71
B)accept; 9.90
C)accept; 11.43
D)reject; 5.71
E)reject; 11.43

Question

Quizplus · Accepted Answer

reject; 11.43

A Project Has Average Net Income of $5,600 a Year