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What is the accounting rate of return for project

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Reference no: EM131769560

Question - The Silverside Company is considering investing in two alternative projects:

 

Project 1

Project 2

Investment

$600,000

$280,000

Useful life (years)

9

5

Estimated annual net cash inflows for useful life

$120,000

$60,000

Residual value

$24,000

$12,000

Depreciation method

Straight - line

Straight - line

Required rate of return

14%

8%

Required - What is the accounting rate of return for Project? 2?

A. 4.29

B. 2.29%

C. 47.14%

D. 21.43%

Reference no: EM131769560

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