Question: The Depot is considering a project with an initial cost for fixed assets of $279,900 and annual sales of $284,000 for four years. The profit

  1. The Depot is considering a project with an initial cost for fixed assets of $279,900 and annual sales of $284,000 for four years. The profit margin is 6.72 percent, and the tax rate is 34 percent. The fixed assets will be depreciated straight-line over the life of the project to a zero book value. The required average accounting rate of return is 14.5 percent. Should this project be accepted or rejected? What is the AAR?

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