Yipann Corporation is reviewing an investment proposal. The initial cost as well as other related data for each year are presented in the schedule below. All cash flows are assumed to take place at the end of the year. The salvage value of the investment at the end of each year is equal to its net book value, and there will be no salvage value at the end of the investment's life.

Investment Proposal

Annual Net

Initial Cost         After-Tax     Annual

Year and Book Value  Cash Flows   Net Income

0        $105,000        $0          $   0

1          70,000      50,000       15,000

2          42,000      45,000       17,000

3          21,000      40,000       19,000

4           7,000      35,000       21,000

5             0         30,000       23,000

Yipann uses a 24% after-tax target rate of return for new investment proposals. The discount figures for a 24% rate of return are given.

Present Value of

Present Value of        Annuity of $1

$1 Received at      Received at End

Year the End of Period  of Each Period

1                .81           .81

2                .65          1.46

3                .52          1.98

4               .42            2.40

5               .34            2.74

6               .28            3.02

7               .22            3.24

The accounting rate of return for the investment proposal over its life using the initial value of the investment is

A. 18.1%.

B. 36.2%.

C. 28.1%.

D. 38.1%.