You're trying to determine whether to expand your business by building a new manufacturing plant. The...

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Youre trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installati

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Answer 1

Answer #1

Average net income=Total net income/Total time period

=(1,804,300+1,857,600+1,826,000+1,279,500)/4=1691850

Average investment=(11,500,000/2)=5750000

AAR=Average net income/Average investment

=1691850/5750000

=29.42%(Approx).

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Answer 2

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