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...
Question
3
![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
%
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F128593f5-7ea4-4e3b-94cd-55abf91c7165%2Fe3af8d59-226c-4411-b430-139186486de2%2Focjknu8_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
%
%
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