The Depot Is Considering a Project with an Initial Cost

Multiple Choice

The Depot is considering a project with an initial cost for fixed assets of $279,900 and annual sales of $284,000 for four years.The profit margin is 6.72 percent,and the tax rate is 34 percent.The fixed assets will be depreciated straight-line over the life of the project to a zero book value.The required average accounting rate of return is 14.5 percent.Should this project be accepted or rejected? What is the AAR?

A) Rejected; 14.81%
B) Rejected; 13.68%
C) Rejected; 15.03%
D) Accepted; 14.81%
E) Accepted; 13.68%