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  1. business
  2. accounting
  3. a) average rate of return the following data are

A) Average Rate of Return The following data are accumulated by Lone Peak Inc....

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Accounting

A)

Average Rate of Return

The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals:

3D Printer Truck
Amount of investment $96,000 $40,000
Useful life 4 years 7 years
Estimated residual value 0 0
Estimated total income over the useful life $8,640 $12,600

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 %

B)

Cash payback period for a Service Company

Omni Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $150,000 and each with an 8-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1 $59,000 Year 5 $31,000
Year 2 44,000 Year 6 25,000
Year 3 29,000 Year 7 18,000
Year 4 18,000 Year 8 16,000

Determine the cash payback period for both location proposals.

Location 1

12345678

years
Location 2

12345678

years

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