Average accounting return A firm is considering a 3-year project. It is believed that the first year’s sales will be $21,000 and that this number will increase by $2,000 (over each previous year) in each of the remaining 2 years.

Costs are estimated to be 46 % of sales, and depreciation will be $3,000 each year, based upon straight-line depreciation. The firm’s tax rate is 35 %.

The project has a NINV of $24,000; what is the project’s AAR?