You're trying to determine whether to expand your business by manufacturing plant. The plant has an installation cost of $11.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,814,300, $1,867,600, $1,836,000, and $1,289,500 over these four years, respectively, what is the project's average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You're trying to determine whether to expand your business by manufacturing plant. The plant has an installation cost of $11.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,814,300, $1,867,600, $1,836,000, and $1,289,500 over these four years, respectively, what is the project's average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You're trying to determine whether to expand your business by building a new
manufacturing plant. The plant has an installation cost of $11.6 million, which will be
depreciated straight-line to zero over its four-year life. If the plant has projected net
income of $1,814,300, $1,867,600, $1,836,000, and $1,289,500 over these four years,
respectively, what is the project's average accounting return (AAR)? (Do not round
intermediate calculations and enter your answer as a percent rounded to 2 decimal
places, e.g., 32.16.)
Average accounting return
%
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