ARR (average accounting return) for new manufacturing

You're trying to determine whether or not to expand your business by building a new manufacturing plant. The plant has an installment cost of $12 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,627,000, $1,512,000, $1,101,000, and $1,313,000 over these four years, what is the project's average accounting return (AAR)?

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... the initial investment. Therefore, use second equation.

First, find depreciation

Depreciation per year = 12,000,000 / 4 (Straight line method, zero value at Y4)
= 3,000,000

Find profit per year

Annual ...