A Project Has Average Net Income of $2,100 a Year

Multiple Choice

A project has average net income of $2,100 a year over its 4-year life.The initial cost of the project is $65,000 which will be depreciated using straight-line depreciation to a book value of zero over the life of the project.The firm wants to earn a minimal average accounting return of 8.5%.The firm should _____ the project based on the AAR of ____.

A) accept; 6.46%.
B) accept; 9.69%.
C) accept; 12.92%.
D) reject; 6.46%.
E) reject; 12.92%.