Delta Mu Delta Is Considering Purchasing Some New Equipment Costing

Multiple Choice

Delta Mu Delta is considering purchasing some new equipment costing $400,000.The equipment will be depreciated on a straight-line basis to a zero book value over the four-year life of the project.Projected net income for the four years is $18,900,$21,300,$26,700,and $25,000.What is the average accounting rate of return?

A) 11.49 percent
B) 11.63 percent
C) 12.01 percent
D) 12.49 percent
E) 13.20 percent