Question: Alpha Corp. is considering adding a new product to its lineup and has estimated the following: Year Net Income 0 0 1 $1,500 2 $3,800

Alpha Corp. is considering adding a new product to its lineup and has estimated the following:

Year Net Income
0 0
1 $1,500
2 $3,800
3 $7,100
4 $3,300

If the average book value is $20,000, what is the average accounting return (AAR) of the project?

Multiple Choice

  • 16.50%

  • 7.31%

  • 19.63%

  • 78.50%

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