The Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $860,000 $510,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $68,000 Residual value $42,000 $- Depreciation method Straight-line Straight-line Required rate of return 13% 13% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.) 2.62% 15.12% 3.23% 1.57%
The Corporation is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $860,000 $510,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $68,000 Residual value $42,000 $- Depreciation method Straight-line Straight-line Required rate of return 13% 13% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.) 2.62% 15.12% 3.23% 1.57%
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Corporation is considering two alternative investment proposals with the following data:
Proposal X Proposal Y Investment $860,000 $510,000 Useful life 8 years 8 years Estimated annual net
cash inflows for 8 years$130,000 $68,000 Residual value $42,000 $- Depreciation methodStraight-line Straight-line Required rate of return 13% 13%
What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)2.62%
15.12%
3.23%
1.57%
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