Average Rate of Return
The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals:
Testing Equipment | Diagnostic Software | |||
Amount of investment | $60,000 | $64,000 | ||
Useful life | 4 years | 9 years | ||
Estimated residual value | $0 | $0 | ||
Estimated total income over the useful life | $9,600 | $33,120 |
Determine the expected average rate of return for each proposal. If required, round to one decimal place.
Testing Equipment | % |
Diagnostic Software | % |
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