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Chrome File Edit View History Bookmarks People Window Help 52%)O Tue 10:20 AM Hassan Alsaihati aE Hassan / D Assignment 11-GRADED-C/X C O | ezto.mheducation.com/hm.tpx -UWM :::Apps hotmail A ALEKS E MathwayPEX·Expedia-CR EagleRider Rentals AT&T; Pay Online at .VIPO hwilev PLUS Oni 0 FINANCE Assignment 11- GRADED Ch.8 instructions help Question 2 (of 6) Save & Exit | | Submit value: 1.00 points You did not receive full credit for this question in a previous attempt You're trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installation cost of $19.4 million, which will be depreciated straight-line to zero over its four-year life If the plant has projected net income of $1,855,000, $2,165,000, $2,074,000, and $1,346,000 over these four years, what is the project's average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average accounting return -299000C % Hints eBook & Resources Hint#1 Hint #2

Explanation / Answer

Average net income = total net income/no. of years

Average net income = (1855000 + 1265000 + 2074000 + 1346000)/4 = 1860000

Average book value = beginning value + closing vlue / 2

= 19400000+0 / 2 = 9700000

AAR = average net income/average book value = 1860000 / 9700000 = 0.1918 = 19.18%

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