Randy Ritchie
Randy Ritchie Is Considering Investing $20,000 in a Project

Randy Ritchie
Randy Ritchie is considering investing $20,000 in a project with the following annual cash revenues and expenses: $\begin{array}{lll}&\text { Cash } & \text { Cash } \\&\text { Revenues } & \text { Expenses }\\\text { Year 1 } & \$ 8,000 & \$ 8,000 \\\text { Year 2 } & \$ 12,000 & \$ 8,000 \\\text { Year 3 } & \$ 15,000 & \$ 9,000 \\\text { Year 4 } & \$ 20,000 & \$ 10,000 \\\text { Year 5 } & \$ 20,000 & \$ 10,000\end{array}$ Depreciation will be $4,000 per year.
-Refer to Randy Ritchie. What is the accounting rate of return on the investment?

A) 10%
B) 15%
C) 35%
D) 75%

Correct Answer:

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