A Project Has an Initial Cost of $35,000 and a 3-Year

Multiple Choice

A project has an initial cost of $35,000 and a 3-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, $2,300, and $1,800 a year for the next 3 years, respectively. What is the average accounting return?

A) 8.72 percent
B) 10.10 percent
C) 11.26 percent
D) 14.69 percent
E) 15.14 percent