Question
Spacely Sprockets Inc is a new start-up evaluating a new project. They worry that they don't have all the requisite operating information they will need
Spacely Sprockets Inc is a new start-up evaluating a new project. They worry that they don't have all the requisite operating information they will need to estimate Cash Flows From Assets and that they wouldn't be able to evaluate this project based on NPV and IRR (which both use the CFFA's to evaluate). Instead they have decided to use the Average Accounting Return (AAR) rule to evaluate the project. What is the AAR for this project? (Enter your answer as a percentage and Round to 2 decimals)
| Net Income | Book Value of Assets | |
|---|---|---|
| Year 1 | 64,000 | 556,000 |
| Year 2 | 42,000 | 702,000 |
| Year 3 | 110,000 | 508,000 |
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Financial Management In The Sport Industry
Authors: Matthew T Brown, Daniel Rascher, Mark S Nagel, Chad Mcevoy
1st Edition
1934432040, 978-1934432044
