A company is evaluating three possible investments. Each uses the straight-line method of depreciation. The following information is provided by the company:
Project A
Project B
Project C
Investment
$240,000
$54,000
$240,000
Residual value
0
10,000
36,000
Net cash flows:
Year 1
52,000
40,000
96,000
Year 2
52,000
31,000
66,000
Year 3
52,000
27,000
76,000
Year 4
52,000
24,000
36,000
Year 5
52,000
0
0
What is the accounting rate of return for Project C? (Round your answer to two decimal places.)
A. 12.50%
B. 15.00%
C. 44.44%
D. 12.68%
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