*Disco Roller Fishing, Inc. is evaluating whether to expand their base of operations by adding a...

 

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*Disco Roller Fishing, Inc. is evaluating whether to expand their base of operations by adding a new fishpond. The new fishpond is forecast to have an installation cost of $11.65 million, which will be straight-line depreciated to $3.45 million over its four-year life. If the fishpond has projected net income of $1,320,000, $1,518,000, $1,669,800, and $1,252,350 over these four years, respectively, what is the Average Accounting Return (AAR)? If the target AAR is 21.50 % should this project be accepted? *Disco Roller Fishing, Inc. is evaluating whether to expand their base of operations by adding a new fishpond. The new fishpond is forecast to have an installation cost of $11.65 million, which will be straight-line depreciated to $3.45 million over its four-year life. If the fishpond has projected net income of $1,320,000, $1,518,000, $1,669,800, and $1,252,350 over these four years, respectively, what is the Average Accounting Return (AAR)? If the target AAR is 21.50 % should this project be accepted?

Answer rating: 100% (QA)

The Average Accounting Return AAR can be calculated by taking the average of the net income ov... View the full answer