| MYUSFx My HomeCengageNOWv2 | Online teachin Xengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker%3D&takeAssignmentSessionLocator3D&inpro... to全临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. Theestimated net income and net cash flow from the project are as follows:YearNet IncomeNet Cash Flow$75,000$285,0002100,000290,0003.109,000190,000436,000125,000$320,000$890,000The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for , 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.PreviousNext9:40 PM5/8/20212.

Average rate of return of investment = Average net income * 100/(Initial investment-Salvage value)

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Chapter26: Capital Budgeting (capbud)

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Question

| MYUSF
x My Home
CengageNOWv2 | Online teachin X
engagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker%3D&takeAssignmentSessionLocator3D&inpro... to
全临
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
$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 , 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.
Previous
Next
9:40 PM
5/8/2021
2.

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