A company is evaluating three possible investments. Each uses straight-line method of depreciation. Following information is provided by the company.
| Project A |
Project B |
Project C |
| Investment |
200,000 |
$50,000 |
$200,000 |
| Salvage value |
0 |
5,000 |
50,000 |
| Net cash flows: |
| Year 1 |
50,000 |
25,000 |
80,000 |
| Year 2 |
50,000 |
16,000 |
50,000 |
| Year 3 |
50,000 |
12,000 |
60,000 |
| Year 4 |
50,000 |
9,000 |
20,000 |
| Year 5 |
50,000 |
0 |
0 |
What is the accounting rate of return for Project C?