(1)-sb664246@gue l Project-FIN200,005,2012 Chapter #8 × le Search Textbook Solut

Q: 1)-sb664246@gue l Project-FIN200,005,2012 Chapter #8 × le Search Textbook Solut

Year Income 1 $ 1,935,000 2 $ 2,206,000 3 $ 2,154,000 4 $ 1,386,000 Total Return $ 7,681,000 Average return $ 1,920,250 Average accounting rate of return = Average accounting profit/Average investment = $ 1,920,250 /$21,000,000 = 0.09144047 or 9.14 % Year Income 1 $ 1,935,000 2 $ 2,206,000 3 $ 2,154,000 4 $ 1,386,000 Total Return $ 7,681,000 Average return $ 1,920,250

ID: 2782844 • Letter: #

Question

(1)-sb664246@gue l Project-FIN200,005,2012 Chapter #8 × le Search Textbook Solutions | | + ezto mheducat 1 E connect FIN 200 F2017: Fall 2017 Kelly Tuesday & 10 00 points Problem 8-4 Calculating AAR [LO 2] You're trying to dotermine whother or not to expand your business by building a new manufacturing plant The plant has an installation cost of $21 million, which will be deprecisted straight-line to zero over ts four yoar Me If the plant has projected net income of $1,935,000, $2 205,000, 52.154000, and1,386,000 over these four years, what is the project's average accounting reurm (asrp (Do not round intermediate calculations and enter y answer as a percent rounded to 2 decimal places,e.g., 32.16 Average accounting retunm References Section 83 The Peage Accouning Rotum Dculty 1 Basic Problem 8-4 Calculating AAR [LO 2 Leaming Objective 0s-02 Discuss accounting ralos of soturm and some of the problems wih therm Check my.work ype search

Explanation / Answer

Year

Income

$ 1,935,000

$ 2,206,000

$ 2,154,000

$ 1,386,000

Total Return

$ 7,681,000

Average return

$ 1,920,250

Average accounting rate of return = Average accounting profit/Average investment

= $ 1,920,250 /$21,000,000

= 0.09144047 or 9.14 %