Project 1 involves an outlay of $2.5m and gets an annual net income of $1m for 5 years. Project 2 involves an outlay of $10m but gets no income until year 5. year project 1 project 2 0 -2.5 -10 1 1 0 2 1 0 3 1 0 4 1 0 5 1 15 Use the payback method to decide which is the most attractive project. __________ What is the accounting rate of return for project 1? Write your answer as a percent using the percent symbol. ________ What is the accounting rate of return for project 2? Write your answer as a percent using the percent symbol. _________ Decide which is the most attractive project using the accounting rate of return method. ________________
Project 1 involves an outlay of $2.5m and gets an annual net income of $1m for 5 years. Project 2 involves an outlay of $10m but gets no income until year 5. year project 1 project 2 0 -2.5 -10 1 1 0 2 1 0 3 1 0 4 1 0 5 1 15 Use the payback method to decide which is the most attractive project. __________ What is the accounting rate of return for project 1? Write your answer as a percent using the percent symbol. ________ What is the accounting rate of return for project 2? Write your answer as a percent using the percent symbol. _________ Decide which is the most attractive project using the accounting rate of return method. ________________
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Project 1 involves an outlay of $2.5m and gets an annual net income of $1m for 5 years. Project 2 involves an outlay of $10m but gets no income until year 5.
|
year |
project 1 |
project 2 |
|
0 |
-2.5 |
-10 |
|
1 |
1 |
0 |
|
2 |
1 |
0 |
|
3 |
1 |
0 |
|
4 |
1 |
0 |
|
5 |
1 |
15 |
Use the payback method to decide which is the most attractive project. __________
What is the accounting
What is the accounting rate of return for project 2? Write your answer as a percent using the percent symbol. _________
Decide which is the most attractive project using the accounting rate of return method. ________________
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