1/McAfee Automobiles Manufacturing are considering two alternative investment proposals with the following data: Proposal X Proposal Y $10,500,000 5 years $2,100,000 $52,000 Straight-line 13% Investment $500,000 5 years $105,000 $32,000 Straight-line 12% Useful life Estimated annual net cash inflows for 5 Residual value years Depreciation method Required rate of return Calculate the accounting rate of return for Proposal Y.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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1/McAfee Automobiles Manufacturing are considering two alternative investment proposals
with the following data:
Proposal X Proposal Y
$10,500,000
5 years
$2,100,000
$52,000
Straight-line
13%
Investment
$500,000
Useful life
5 years
$105,000
$32,000
Straight-line
12%
Estimated annual net cash inflows for 5
Residual value
years
Depreciation method
Required rate of return
Calculate the accounting rate of return for Proposal Y.
Transcribed Image Text:1/McAfee Automobiles Manufacturing are considering two alternative investment proposals with the following data: Proposal X Proposal Y $10,500,000 5 years $2,100,000 $52,000 Straight-line 13% Investment $500,000 Useful life 5 years $105,000 $32,000 Straight-line 12% Estimated annual net cash inflows for 5 Residual value years Depreciation method Required rate of return Calculate the accounting rate of return for Proposal Y.
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