Average net income=Total net income/Total time period
=(1,293,000+1,725,000+1,548,000+1,310,000)/4=1469000
Average investment=(10,800,000/2)=5,400,000
AAR=Average net income/Average investment
=1469000/5,400,000
=27.20%(Approx).
You're trying to determine whether or not to expand your business by building a new manufacturing...
You’re trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $10.8 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,293,000, $1,725,000, $1,548,000, and $1,310,000 over these four years, what is the project’s average accounting return (AAR)?
You’re trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $10.8 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,293,000, $1,725,000, $1,548,000, and $1,310,000 over these four years, what is the project’s average accounting return (AAR)?
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Hi, I need help with this question. thank you You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $11 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,754,300, $1,807,600, $1,776,000, and $1,229,500 over these four years, respectively, what is the project's average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as...
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