Final answer:
The student is inquiring about the accrual accounting rate of return which cannot be directly calculated from the given scenarios. The provided scenarios discuss investment decisions based on the rate of return versus borrowing costs, suggesting that a company should invest if the rate of return exceeds the cost of capital.
Step-by-step explanation:
The student is asking about how to calculate the accrual accounting rate of return on an initial investment. This calculation would involve determining the expected annual net income from the investment and dividing it by the initial investment amount. However, with the information provided, we are not given specific values for annual net income or initial investment to directly calculate the accrual accounting rate of return. Instead, we are presented with a scenario where a firm is considering an investment with a 6% rate of return and has the option to finance it with cash on hand instead of borrowing at an 8% interest rate. The decision here would involve comparing the investment's rate of return to the cost of capital; since the company has the cash available, the cost of capital is presumably lower than 6%. Thus, the investment would be favorable since it offers a higher rate of return than the cost of capital.