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 $23.8 million, which will be depreciated straight-line to zero over its four-year life.
If the plant has projected net income of $2,075,000, $2,275,000, $2,294,000, and $1,456,000 over these four years, what is the project’s average accounting return (AAR)? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Average accounting return