Average Accounting Return T
he Waitangi Group has invested $18,000 in a high-tech project lasting three years. Depreciation is $5,300, $7,800, and $4,900 in years 1, 2, and 3, respectively. The project generates pretax income of $2,260 each year. The pretax income already includes the depreciation expense. If the tax rate is 25 percent, what is the project’s average accounting return (AAR)?
Average Accounting Return T