The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals: Testing Equipment Diagnostic Software Amount of investment $300,000 $150,000 Useful life 8 years 5 years Estimated residual value $40,000 $5,000 Estimated total income over the useful life $244,800 $85,250 Determine the expected average rate of return for each proposal. Testing Equipment fill in the blank 1 100 % Diagnostic Software fill in the blank 2 %

The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals: Testing Equipment Diagnostic Software Amount of investment $300,000 $150,000 Useful life 8 years 5 years Estimated residual value $40,000 $5,000 Estimated total income over the useful life $244,800 $85,250 Determine the expected average rate of return for each proposal. Testing Equipment fill in the blank 1 100 % Diagnostic Software fill in the blank 2 %

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.15E

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