Problem:
You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $15 million, which will be depreciated straight-line to zero over its 4-year life.
Requirement:
Question: If the plant has projected net income of $1,567,000, $1,220,000, $1,233,000, and $1,457,000 over these 4 years, the project's average accounting return (AAR) is percent.
Note: Show all workings.