You're Trying to Determine Whether or Not to Expand Your

question 75

Multiple Choice

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 $26 million,which will be depreciated straight-line to zero over its three-year life.If the plant has projected net income of $2,348,000,$2,680,000,and $1,920,000 over these three years,what is the project's average accounting return (AAR) ?

• A)11.69 percent
• B)14.14 percent
• C)15.08 percent
• D)17.82 percent
• E)19.21 percent