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

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Definitions:

Return Value

The output generated by a function or a procedure after execution, which can be a number, text, or complex data types depending on the operation.

VLOOKUP

A function in spreadsheet software that searches for a value in the first column of a range and returns a value in the same row from a specified column.

MATCH Function

A function in Excel and other spreadsheet applications that searches for a specified item in a range of cells, and then returns the relative position of that item.

Total Row

A feature in spreadsheet software that automatically calculates and displays the sum, average, count, or other statistics for data in a column.