19,000 35,000 9.000 240,000 Calculating AAR You're trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $10.8 million, which will De depreciated straight-line to zero ove its four-year life. If the plant has projected net income of $1.293.000, $1.725.000, $1.548,000, and $1,310,000 over these four years, what is the roject's average accounting return (AAR)? LO3I 5. Calculating IRRA firm evaluates all of its projects by applying the IRR role. If the required return is 11 percent, should the firm accept the following project? Year Cash Flow -$157 300 74.000 87.000 46.000 LO4 6. Calculating NPV For the cash flows in the previous problem, suppose the firm uses the NPV decision rule. At a required return of 9 percent, should the firm accept this project? What if the required return was 21 percent? LO3, LO4 7. Calculating NPV and IRR A project that provides annual cash flows of $2,620 for eight years costs $9.430 today. Is this a good project if the required return is 8 percent? What if it's 24 percent? At what discount rate would you be indifferent between accepting the project and rejecting it? 267 LO3 8. Calculating IRR What is the IRR of the following set of cash flows? Cash Flow -$19.400 10,400 9,320 6.900 Iculating NPV For the cash flows in the previous problem, what is the NPV at a discount rate of o percent? What if the discount rate is 10 percent? If it is 20 percent? If it is 3 percent? C has identified the following two mutually exclusive projects