Youre trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $23.4 million, which will be depreciated straight-line to zero over its four-year life.

Required:

If the plant has projected net income of $2,055,000, $2,265,000, $2,274,000, and $1,446,000 over these four years, what is the projects average accounting return (AAR)? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Average accounting return

%

The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects:

Year	Cash Flow (I)	Cash Flow (II)
0	$84,000	$42,000
1	33,900	12,600
2	44,000	31,500
3	50,000	25,500

Requirement 1:
(a)	If the required return is 17 percent, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 3 decimal places (e.g., 32.161).)

	Profitability index
Project I
Project II

(b)	If the required return is 17 percent and the company applies the profitability index decision rule, which project should the firm accept?
	(Click to select)Project IProject II

Requirement 2:
(a)	If the required return is 17 percent, what is the NPV for each project? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

	Net present value
Project I	$
Project II	$