The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $36,000 $24,000 Useful life 4 years 5 years Estimated residual value 0 0 Estimated total income over the useful life $5,760 $6,600 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer fill in the blank 1 % Truck fill in the blank 2 %
The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals: 3D Printer Truck Amount of investment $36,000 $24,000 Useful life 4 years 5 years Estimated residual value 0 0 Estimated total income over the useful life $5,760 $6,600 Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place. 3D Printer fill in the blank 1 % Truck fill in the blank 2 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals:
| 3D Printer | Truck | ||||
| Amount of investment | $36,000 | $24,000 | |||
| Useful life | 4 years | 5 years | |||
| Estimated residual value | 0 | 0 | |||
| Estimated total income over the useful life | $5,760 | $6,600 |
Determine the expected average
| 3D Printer | fill in the blank 1 % |
| Truck | fill in the blank 2 % |
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Divide the estimated average annual income by the average investment. Investment cost plus residual value, divided by two, equals average investment.
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