Your firm requires an average accounting return $($AAR$)$ of at least $15\%$ on all fixed asset purchases. Currently, you are considering some new equipment costing $$487,500.$ This equipment will have a $6-$year life over which time it will be depreciated on a straight line basis to a zero book value. The annual net income from this project is estimated at $$55,000$ a year for the first $3$ years and $$28,000$ a year for the following three years.$$Should you accept this project based on the accounting rate of return? Why or why not?

a$.$

no; because the AAR is greater to $15\%$

b$.$

yes; because the AAR is less than $15\%$

c$.$

yes; because the AAR is greater than $15\%$

d$.$

no; because the AAR is less than $15\%$