Question
Youre trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $21.8
Youre trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $21.8 million, which will be depreciated straight-line to zero over its four-year life.
Required: If the plant has projected net income of $1,975,000, $2,225,000, $2,194,000, and $1,406,000 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 %=
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