Problem:
A project has an initial cost of $52,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $1,900, $1,800, $2,200, and $4,600 a year for the next four years, respectively.
Required:
Question: What is the average accounting return?
- 46.73%
- 20.19%
- 9.90%
- 10.10%
- 5.05%
Note: Show all workings.