Delta Mu Delta Is Considering Purchasing Some New Equipment Costing

Multiple Choice

Delta Mu Delta is considering purchasing some new equipment costing $393,000.The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project.Projected net income for the four years is $16,900, $25,300, $27,700, and $18,400.What is the average accounting rate of return?

A) 11.23 percent
B) 11.63 percent
C) 12.01 percent
D) 12.49 percent
E) 10.87 percent