Average Rate of Return The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Testing Equipment Diagnostic Software $28,000 4 years $40,000 9 years $0 $2,800 $0 $16,200 Determine the expected average rate of retur for each proposal. If required, round to one decimal place. Testing Equipment Diagnostic Software % %
Average Rate of Return The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals: Amount of investment Useful life Estimated residual value Estimated total income over the useful life Testing Equipment Diagnostic Software $28,000 4 years $40,000 9 years $0 $2,800 $0 $16,200 Determine the expected average rate of retur for each proposal. If required, round to one decimal place. Testing Equipment Diagnostic Software % %
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1PA: Average rate of return method, net present value method, and analysis for a service company The...
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