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Average Rate of Return The following data are accumulated by McDermott Motors Inc. evaluating two competing...

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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