Compute accounting rate of return

Reference no: EM1360103

Mulligan Corporation, which is subject to a 30% income tax rate, is considering a $150,000 asset that will result in the following over its seven-year life:

Total revenue: $1,190,000
Total operating expenses (excluding depreciation): $770,000
Total depreciation: $150,000

The accounting rate of return on the initial investment is:

A. 16%
B. 18%
C. 26%
D. 28%
E. some other figure

Reference no: EM1360103

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