Question: You re trying to determine whether to expand your business by
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 $1,854,300, $1,907,600, $1,876,000, and $1,329,500 over these four years, what is the project’s average accounting return (AAR)?
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