ABC Corp. invests $600,000 this year in a five-year project. The investment will have the salvage value of $200,000. The performance of the project over the five-year span was as follows:

At Year 1, the project had $300,000 in revenues, $30,000 in costs of goods sold, $32,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 21%.

At Year 2, the project had $300,000 in revenues, $45,000 in costs of goods sold, $35,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 21%.

At Year 3, the project had $305,000 in revenues, $42,000 in costs of goods sold, $33,000 in other operating expenses, and $22,000 in interest payments. The tax rate was 21%.

At Year 4, the project had $300,000 in revenues, $43,000 in costs of goods sold, $35,000 in other operating expenses, and $20,000 in interest payments. The tax rate was 21%.

At Year 5, the project had $310,000 in revenues, $41,000 in costs of goods sold, $33,000 in other operating expenses, and $22,000 in interest payments. The tax rate was 21%.

What is this project's average accounting return during the five-year span?

HINT: Be sure to set up your depreciation expenses based on the duration of the project.

Answers:

25.36%

26.12%

17.56%

34.65%