Auto Detailers Is Buying Some New Equipment at a Cost

Multiple Choice

Auto Detailers is buying some new equipment at a cost of $188,900.This equipment will be depreciated on a straight-line basis to a zero book value its eight-year life.The equipment is expected to generate net income of $11,000 a year for the first four years and $24,000 a year for the last four years.What is the average accounting rate of return?

A) 15.48 percent
B) 17.76 percent
C) 18.09 percent
D) 22.68 percent
E) 18.53 percent