A Project Has an Initial Cost of $40,000 and a Four-Year

Multiple Choice

A project has an initial cost of $40,000 and a four-year life.The company uses straight-line depreciation to a book value of zero over the life of the project.The projected net income from the project is $1,200,$2,200,$3,500,and $2,700 a year for the next four years,respectively.What is the average accounting return?

A) 3.55%
B) 4.13%
C) 4.28%
D) 7.11%
E) 12.00%