Average rate of return The following data are accumulated by Patterson Inc, in evaluating two competing capital investment proposals: Project C Project T $125,000 $140,000 Amount of investment Useful life Estimated residual value Estimated total income over the useful life Determine the expected average rate of return for each project. Project C Project T 1.03 X % 12.85714 X % 10 years $5,000 $65,000 12 years $10,000 $108,000
Average rate of return The following data are accumulated by Patterson Inc, in evaluating two competing capital investment proposals: Project C Project T $125,000 $140,000 Amount of investment Useful life Estimated residual value Estimated total income over the useful life Determine the expected average rate of return for each project. Project C Project T 1.03 X % 12.85714 X % 10 years $5,000 $65,000 12 years $10,000 $108,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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
Transcribed Image Text:Average rate of return
The following data are accumulated by Patterson Inc. in evaluating two competing capital investment proposals:
Project C Project T
$125,000 $140,000
EE
10 years
12 years
$5,000
$10,000
$65,000
$108,000
Amount of investment
Useful life
Estimated residual value
Estimated total income over the useful life
Determine the expected average rate of return for each project.
Project C
Project T
1.03 X %
12.85714
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