Question - Natt Ltd is considering undertaking a project that would yield annual profits (after depreciation) of £68,000 for 5 years. The initial outlay of the project would be £800,000 and the project's assets would have a residual value of £50,000 at the end of the project.
What would be the accounting rate of return for this project?
a) 16%
b) 8.5%
c) 8.0%
d) 9.1%