Final answer:
The Accounting Rate of Return (ARR) of the IT project, calculated as the net cash flows divided by the initial investment cost and then converted to a percentage, is 66.67%. This matches option C. 67%.
Step-by-step explanation:
The question asks to calculate the Accounting Rate of Return (ARR) for an IT project. ARR is a financial ratio used to assess the profitability of an investment and is calculated by dividing the average annual accounting profit by the initial investment cost. The main answer to the question is found by taking the net cash flows of $100,000 per year and dividing it by the project cost of $150,000, which yields an ARR of 66.67%.Here's the step-by-step explanation of the calculation:Identify the annual net cash flows: $100,000.Identify the initial investment cost: $150,000.Divide the annual net cash flows by the initial investment: $100,000 / $150,000.Convert the result into a percentage: 0.6667 * 100% = 66.67%.In conclusion, the correct Accounting Rate of Return for the IT project is 66.67%, which corresponds to option C. 67%.