Juniper Corporation is considering two alternative investment proposals with the following data: Proposal XProposal YInvestment$810,000$466,000Useful life8 years8 yearsEstimated annual net cash inflows for 8 years$130,000$70,000Residual value$58,000$−Depreciation methodStraight−lineStraight−lineRequired rate of return13%10% What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)

Accounting rate of return (%) =( Average annual profit/initial investment) ×100

Answered: Juniper Corporation is considering two…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 19EA: Redbird Company is considering a project with an initial investment of $265,000 in new equipment...

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Juniper Corporation is considering two alternative investment proposals with the following data:

	Proposal X	Proposal Y
Investment	$810,000	$466,000
Useful life	8 years	8 years
Estimated annual net cash inflows for 8 years	$130,000	$70,000
Residual value	$58,000	$−
Depreciation method	Straight−line	Straight−line
Required rate of return	13%	10%

What is the accounting rate of return for Proposal X? (Round any intermediary calculations to the nearest dollar, and round your final answer to the nearest hundredth of a percent, X.XX%.)

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