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A company is considering a project that would require a cash outflow in the amount of $1,000,000 at the beginning. The company expects the project to generate average annual cash inflows in the amount of $40,000. The average book value for the project is expected to be $250,000 and average annual net income is expected to be $55,000. The company requires a return of 15.25%. What is the average accounting return for this project?

A company is considering a project that would require a cash outflow in the amount of $1,000,000 at the beginning. The company expects the project to generate average annual cash inflows in the amount of $40,000. The average book value for the project is expected to be $250,000 and average annual net income is expected to be $55,000. The company requires a return of 15.25%. What is the average accounting return for this project?

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 2PA: Jasmine Manufacturing is considering a project that will require an initial investment of $52,000...
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A company is considering a project that would require a cash outflow in the amount of $1,000,000 at the beginning. The company expects the project to generate average annual cash inflows in the amount of $40,000. The average book value for the project is expected to be $250,000 and average annual net income is expected to be $55,000. The company requires a return of 15.25%. What is the average accounting return for this project?

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