Gomez Corporation is considering two alternative investment proposals with the following data: ...
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Accounting
Gomez Corporation is considering two alternative investment proposals with the following data:
| Proposal X | Proposal Y | |
| Investment | $850,000 | $468,000 |
| Useful life | 8 years | 8 years |
| Estimated annual net cash inflows for 8 years | $125,000 | $78,000 |
| Residual value | $40,000 | $ 0 |
| Depreciation method | Straight-line | Straight-line |
| Required rate of return | 14% | 10% |
What is the accounting rate of return for Proposal X?
| 14.71% | |
| 2.79% | |
| 2.88% | |
| 26.62% |
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