The Nifty Fifty Is Considering Opening a New Store at a Start-Up

Multiple Choice

The Nifty Fifty is considering opening a new store at a start-up cost of $628,000.The initial investment will be depreciated straight-line to zero over the 15-year life of the project.What is the average accounting rate of return given the following net income projections? $$\begin{array} { | c | r | } \hline \text { Years } & \text { Net Income } \\\hline 1 - 6 & \$ 58,000 \\\hline 6 - 10 & 52,000 \\\hline 11 - 15 & 44,000 \\\hline\end{array}$$

A) 16.42 percent
B) 16.68 percent
C) 17.01 percent
D) 17.18 percent
E) 16.35 percent