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 $44,000 $40,000 Useful life 4 years 9 years Estimated residual value $0 $0 Estimated total income over the useful life $6,600 $22,500 Determine the expected average rate of return for each proposal. If required, round to one decimal place. Testing Equipment % Diagnostic Software %

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 $44,000 $40,000 Useful life 4 years 9 years Estimated residual value $0 $0 Estimated total income over the useful life $6,600 $22,500 Determine the expected average rate of return for each proposal. If required, round to one decimal place. Testing Equipment % Diagnostic Software %

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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