A Project Produces Annual Net Income of $11,500, $13,700, and $16,900

Multiple Choice

A project produces annual net income of $11,500, $13,700, and $16,900 over the three years of its life, respectively. The initial cost of the project is $257,000. This cost is depreciated straight-line to a zero book value over three years. What is the average accounting rate of return if the required discount rate is 6.75 %?

A) 5.33 %
B) 5.46 %
C) 6.58 %
D) 10.92 %
E) 13.90 %