McAfee Automobiles Manufacturing Is Considering Two Alternative Investment Proposals with the Following

Multiple Choice

McAfee Automobiles Manufacturing is considering two alternative investment proposals with the following data: $$\begin{array} { | l | r | r | } \hline & \text { Proposal } X & \text { Proposal Y } \\\hline \text { Investment } & \$ 11,800,000 & \$ 470,000 \\\hline \text { Useful life } & 5 \text { years } & 5 \text { years } \\\hline \text { Estimated annual net cash inflows for 5 years } & \$ 2,360,000 & \$ 103,000 \\\hline \text { Residual value } & \$ 58,000 & \$ 34,000 \\\hline \text { Depreciation method } & \text { Straight-line } & \text { Straight-line } \\\hline \text { Required rate of return } & 12 \% & 10 \% \\\hline\end{array}$$ Calculate the accounting rate of return for Proposal Y.(Round any intermediate calculations and your final answer to two decimal places.)

A) 16.10%
B) 10.63%
C) 6.27%
D) 10.80%