Question - Gomez Corporation is considering two alternative investment proposals with the following data:
Investment: Proposal X - $850,000; Proposal Y - $468,000
Useful Life: Proposal X - 8 years; Proposal Y - 8 years
Estimated Annual Net Cash Inflows for 8 years: Proposal X - $125,000; Proposal Y - $78,000
Residual Value: Proposal X - $40,000; Proposal Y - $---
Depreciation Method: Proposal X - Straight-line; Proposal Y - Straight-line
Required Rate of Return: Proposal X - 14%; Proposal Y - 10%
What is the accounting rate of return for Proposal Y?
A) 29.17%
B) 5.24%
C) 4.17%
D) 16.67%