3. MBATech, Inc., is negotiating with the mayor of Bean City to start a manufacturing plant in an abandoned building. The cash flows for MBAT's proposed plant are: Year 0 - 1,000,000 Year 1 371,739 Year 2 371,739 Year 3 371,739 Year 4 371,739 The city has agreed to subsidize MBAT. The form and timing of the subsidy have not been determined, and depend on which investment criterion is used by MBAT. In preliminary discussions, MBAT suggested four alternatives: [D] Subsidize the project to provide an accounting rate of return (ARR) of 40%. This is defined as: Investment # of Years Average Annual Cash Flow - ARR = = Investment = 2