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, what is the project's average accounting return (AAR)?
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, what is the project's average accounting return (AAR)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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, what is the project's average accounting
return (AAR)?
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