3. A drug manufacturer has purchased a plot of land for 800,000 and plans to build small production units to enable the technology transfer and subsequent expected expansion of new drug products. The firm has sufficient funds to build two units in the first year and the revenue from projected sales will allow the building of two more units in the following year. The cost of building each unit is estimated at 90,000. The first two units are expected to provide 175,000 of profit in the first year (although this figure will be impacted see below*) The plan is to continue this progress year on year until the site is full which will take 5 years. (10 production units in total) In considering the costings the following has been assumed:- Profits (driven by increased sales) will rise proportional to the number of units and by an additional 3% year on year. Building costs will increase by 4% year on year Addition costs * (additional staffing, admin etc.) will reduce the annual profit figures by 10%. Calculate the average rate of return (ARR) for the 5 years. [3 marks