Colin Is Analyzing a 3-Year Project That Has an Initial

Multiple Choice

Colin is analyzing a 3-year project that has an initial cost of $199,800. This cost will be depreciated straight-line to zero over three years. The projected annual net income for the three years is $11,600, $15,900, and $17,200. If the discount rate is 12 percent, what is the average accounting rate of return?

A) 13.94 percent
B) 14.91 percent
C) 15.66 percent
D) 14.75 percent
E) 15.31 percent