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Question#3- You’re trying to determine whether to expand your business by building a new manufacturing plant....

Question#3- 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 $1,856,400, $1,909,700, $1,878,100, and $1,331,600 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.)

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Answer #1

Average Accounting Return (AAR): Year 0 1 2 Cash Flows -1,20,00,000.00 18,56,400.00 19,09,700.00 18,78,100.00 13,31,600.00 -5

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