3. 6.

Calculating AAR [LO 9.4] You are trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $13.5 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected profit for the year of $1 570 000, $1 684 200, $1 716 300 and

$1 097 400 over these four years, respectively, what is the project’s average accounting return (AAR)?