The Green Fiddle Is Considering a Project with Sales of $86,800

Multiple Choice

The Green Fiddle is considering a project with sales of $86,800 a year for the next four years. The profit margin is 6 percent, the project cost is $97,500, and depreciation is straight-line to a zero book value over the life of the project. The required accounting return is 10.8 percent. This project should be ________ because the AAR is ________ percent.

A) rejected; 11.03
B) accepted; 10.68
C) rejected; 11.16
D) accepted; 11.03
E) rejected; 10.68