Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project z Amount of investment $84,000 $60,000 Useful life 4 years 7 years Estimated residual value Estimated total income over the useful life $7,560 $16,800 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A % Project Z %

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 3PB: Net present value method, present value index, and analysis for a service company First United Bank...
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Average Rate of Return
The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals:
Project A
Project z
Amount of investment
$84,000
$60,000
Useful life
4 years
7 years
Estimated residual value
Estimated total income over the useful life
$7,560
$16,800
Determine the expected average rate of return for each project. Round your answers to one decimal place.
Project A
%
Project Z
%
Transcribed Image Text:Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project z Amount of investment $84,000 $60,000 Useful life 4 years 7 years Estimated residual value Estimated total income over the useful life $7,560 $16,800 Determine the expected average rate of return for each project. Round your answers to one decimal place. Project A % Project Z %
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