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 %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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 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 %
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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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