Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (123,000) Project 2 $ (93,000) Salvage value 0 13,000 Annual income 14,145 12,720 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Accounting Rate of Return Denominator: Numerator: 1 = Accounting rate of return 0 0 < Required A Required B >
Information for two alternative projects involving machinery investments follows: Initial investment Project 1 $ (123,000) Project 2 $ (93,000) Salvage value 0 13,000 Annual income 14,145 12,720 a. Compute accounting rate of return for each project. b. Based on accounting rate of return, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute accounting rate of return for each project. Project 1 Project 2 Accounting Rate of Return Denominator: Numerator: 1 = Accounting rate of return 0 0 < Required A Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question

Transcribed Image Text:Information for two alternative projects involving machinery investments follows:
Initial investment
Project 1
$ (123,000)
Project 2
$ (93,000)
Salvage value
0
13,000
Annual income
14,145
12,720
a. Compute accounting rate of return for each project.
b. Based on accounting rate of return, which project is preferred?
Complete this question by entering your answers in the tabs below.
Required A Required B
Compute accounting rate of return for each project.
Project 1
Project 2
Accounting Rate of Return
Denominator:
Numerator:
1
=
Accounting rate of return
0
0
< Required A
Required B >
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