Calculating AAR You're trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12.6 million, which will be depreciated straight-line to zero over its four-year life. If the plant has projected net income of $1,430,000, $1,523,460, $1,716,300, and $1,097,400 over these four years, respectively, what is the project's average accounting return (AAR)?
(a) Calculate the average net income.
(b) Average book value