Average Accounting Return The Bluerock Group has invested $8,000 in a high-tech project lasting three years. Depreciation
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Average Accounting Return The Bluerock Group has invested $8,000 in a high-tech project lasting three years. Depreciation is $4,000, $2,500, and $1,500 in years 1, 2, and 3, respectively.
The project generates pretax income of $2,000 each year. The pretax income already includes the depreciation expense. If the tax rate is 25 percent, what is the project’s average accounting return (AAR)? LO.1
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