What is the project average accounting return

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Reference no: EM131939774

You have invested $10,000 in a project lasting three years. Depreciation is $3,000, $3,000, and $4,000 in year 1, 2 and 3, respectively. The project generates pre-tax income of $1,000, $1,800, and $1,600 in year 1, 2 and 3, respectively. The pre-tax income already deducts the depreciation expense. If the tax rate is 20%, what is the project’s average accounting return (AAR)?

Reference no: EM131939774

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