What is average accounting rate of return on this project

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Reference no: EM131326848

The Jensen Company has compiled the following information about a project they are considering. Initial cost: $850,000, to be depreciated straight line over 5 years Cash Flows for Years 1-5: $50,000, $125,000, $220,000, $250,000, $125,000 Net income for Years 1-5: -$36,000, $39,000, $134,000, $164,000, $39,000. What is the average accounting rate of return on this project?

a. 16.00%

b. 18.12%

c. 19.39%

d. 32.00%

e. None of these

Reference no: EM131326848

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