The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals:   Testing Equipment Diagnostic Software Amount of investment $44,000   $80,000   Useful life 4 years   7 years   Estimated residual value $0   $0   Estimated total income over the useful life $4,840

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 1PA: Average rate of return method, net present value method, and analysis for a service company The...
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The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals:

  Testing Equipment Diagnostic Software
Amount of investment $44,000   $80,000  
Useful life 4 years   7 years  
Estimated residual value $0   $0  
Estimated total income over the useful life $4,840   $28,000  

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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