A Project Has an Initial Cost of $61,000 and a 5-Year

Multiple Choice

A project has an initial cost of $61,000 and a 5-year life. The company uses straight-line depreciation to a zero book value over the life of the project. The projected net income from the
Project is $1,500, $1,600, $1,900, $2,100, and $2,200 a year for the next five years, respectively.
What is the average accounting rate of return?

A) 6.10 percent
B) 7.62 percent
C) 7.97 percent
D) 8.48 percent
E) 9.42 percent