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 10 -2.5 -10 10 2 10 4 10 1. 15 Use the payback method to decide which is the most attractive project. What is the accounting rate of return for project 17 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 10 -2.5 -10 10 2 10 4 10 1. 15 Use the payback method to decide which is the most attractive project. What is the accounting rate of return for project 17 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.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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![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
-2.5
-10
1
10
1
3
4
10
1.
15
Use the payback method to decide which is the most attractive project.
What is the accounting rate of return for project 17 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.
1.
1.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3b938e25-7833-4daf-8d06-e19f3d9062f7%2Feda96716-343d-404f-be1b-d68fa8fb93e5%2F65lu053_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
-2.5
-10
1
10
1
3
4
10
1.
15
Use the payback method to decide which is the most attractive project.
What is the accounting rate of return for project 17 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.
1.
1.
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