You’re trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $21.8 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,975,000, $2,225,000, $2,194,000, and $1,406,000 over these four years, what is the project’s average accounting return (AAR)? Note: 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 or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $21.8 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,975,000, $2,225,000, $2,194,000, and $1,406,000 over these four years, what is the project’s average accounting return (AAR)? Note: 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
Problem 1PS
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You’re trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $21.8 million, which will be
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
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