Problem:

A project has an initial cost of $52,000 and a four-year life. The company uses straight-line depreciation to a book value of zero over the life of the project. The projected net income from the project is $1,900, $1,800, $2,200, and $4,600 a year for the next four years, respectively.

Required:

Question: What is the average accounting return?

• 10.10 percent
• 20.19 percent
• 5.05 percent
• 46.73 percent
• 9.90 percent

Note: Please show how to work it out.