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%
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%
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
Related questions
Question
![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%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F28292306-524a-42cd-9c98-f71dba4ec696%2F183e9132-693f-4478-b4b6-0f15aba5d8ba%2Fegvcqpd_processed.jpeg&w=3840&q=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%
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![EBK CONTEMPORARY FINANCIAL MANAGEMENT](https://www.bartleby.com/isbn_cover_images/9781337514835/9781337514835_smallCoverImage.jpg)
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
![Financial Management: Theory & Practice](https://www.bartleby.com/isbn_cover_images/9781337909730/9781337909730_smallCoverImage.gif)
![Managerial Accounting: The Cornerstone of Busines…](https://www.bartleby.com/isbn_cover_images/9781337115773/9781337115773_smallCoverImage.gif)
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
![Cornerstones of Cost Management (Cornerstones Ser…](https://www.bartleby.com/isbn_cover_images/9781305970663/9781305970663_smallCoverImage.gif)
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning