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Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year   Net Income   Net Cash Flow 1   $75,000   $285,000  2   100,000    290,000 3   109,000    190,000 4     36,000    125,000     $320,000    $890,000     The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Required: Determine the average rate of return on investment. Round your answer to one decimal place. fill in the blank 1 %

Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year   Net Income   Net Cash Flow 1   $75,000   $285,000  2   100,000    290,000 3   109,000    190,000 4     36,000    125,000     $320,000    $890,000     The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Required: Determine the average rate of return on investment. Round your answer to one decimal place. fill in the blank 1 %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows:

Year   Net Income   Net Cash Flow
1   $75,000   $285,000 
2   100,000    290,000
3   109,000    190,000
4     36,000    125,000
    $320,000    $890,000

 

 

The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively.

Required:

Determine the average rate of return on investment. Round your answer to one decimal place.
fill in the blank 1 %

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