You're trying to determine whether or not to expand your business by building a new manufacturing...

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Youre trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an ins

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Answer 1

Answer #1

We know that,

Average net income = (1995000 +2235000 + 2214000 + 1416000 ) / 4

= 1965000

Average Investment = (Beginning book value + Closing book value)/2

= (22200000 + 0)/2 = 11100000

AAR = Average net income / Average investment

= 1965000 / 11100000 = 0.1770

= 17.70% Answer

Kindly do inform me in case you have any queries.

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Answer 2

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