Average rate return: the following data accumulate by watershed inc. and evaluating two competing capital investment proposal: amount invested- $80,000 project A and project Z $52,000 Useful life- project A 4 years and project Z 5 years Estimate residual value- project A 0 and project Z 0 Estimate the total income over the useful life. Project A $8,800 project Z $11,050 Determine the expected average rate of return for each project. Round your answer to one decimal place.

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.