You're Trying to Determine Whether to Expand Your Business by Building

question 19

Multiple Choice

You're trying to determine whether to expand your business by building a new manufacturing plant.The plant has an installation cost of $12 million,which will be depreciated straight-line to zero over its 4-year life.The plant has projected net income of $1,095,000,$902,000,$1,412,000,and $1,724,000 over these 4 years.What is the average accounting return?

• A)10.70 percent
• B)15.63 percent
• C)18.87 percent
• D)21.39 percent
• E)23.05 percent

---

Definitions:

Fontanels Close

The process by which the soft, membranous gaps (fontanels) between the skull bones of an infant gradually harden and close.

Occipital Bone

A bone that forms the back and base of the skull, and contains the foramen magnum through which the spinal cord passes.

Cranial

Pertaining to the skull or cranium, often used to describe the direction towards the head.

Caudal

means towards the tail or posterior part of the body, opposite of cranial, which points towards the head.