Question

pls help!! show calculations

5 points Save Answer You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12 million, which will be depreciated straight-line to zero over its four- year life. If the plant has projected net income of $1,860,300, S1,913,600,S1,882,000, and $1,335,500 over these four years, what is the project's average accounting return (AAR)? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit % sign in your response.)

Answer 1

Average net income = (1,860,300 + 1,913,600 + 1,882,000 + 1,335,500) / 4

Average net income = 1,747,850

Average book value = (Beginning value - ending value) / 2

Average book value = (12,000,000 - 0) / 2

Average book value = 6,000,000

Average accounting return = (Average net income / average book value) * 100

Average accounting return = (1,747,850 / 6,000,000) * 100

Average accounting return = 29.13%