Question: Set 3 1. (Total 25points) Average accounting return (AAR) is an investment's average net income divided by its average book value: Let's consider the scenario
Set 3 1. (Total 25points) Average accounting return (AAR) is an investment's average net income divided by its average book value: Let's consider the scenario of potentially opening a store in a new shopping mall. To proceed, we need to invest $750,000 in improvements. The store's operational life spans five years, after which all assets revert to the mall owners. For accounting purposes, the investment would be depreciated at a rate of 100% straight-line over five years, resulting in $150,000 depreciation annually. The applicable tax rate stands at 21%. Fill in the unknow numbers, each box for 1 point. (20 points) What is the AAR? (5 points)
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