You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $11.4 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,794,300, $1,847,600, $1,816,000, and $1,269,500 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.) Answer is complete but not entirely correct. Average accounting return 14.75%

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
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You're trying to determine whether to expand your business by building a new
manufacturing plant. The plant has an installation cost of $11.4 million, which will be
depreciated straight-line to zero over its four-year life. If the plant has projected net
income of $1,794,300, $1,847,600, $1,816,000, and $1,269,500 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.)
Answer is complete but not entirely correct.
Average accounting return
14.75%
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 $11.4 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,794,300, $1,847,600, $1,816,000, and $1,269,500 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.) Answer is complete but not entirely correct. Average accounting return 14.75%
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