You're Trying to Determine Whether to Expand Your Business by Building

Multiple Choice

You're trying to determine whether to expand your business by building a new manufacturing plant.The plant has an installation cost of $12 million,which will be depreciated straight-line to zero over its 4-year life.The plant has projected net income of $1,095,000,$902,000,$1,412,000,and $1,724,000 over these 4 years.What is the average accounting return?

A) 10.70 percent
B) 15.63 percent
C) 18.87 percent
D) 21.39 percent
E) 23.05 percent