verage Rate of Return The following data are accumulated by McDermott Motors Inc. evaluating two...
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Accounting
verage Rate of Return
The following data are accumulated by McDermott Motors Inc. evaluating two competing capital investment proposals:
| Testing Equipment | Diagnostic Software | |||
| Amount of investment | $48,000 | $92,000 | ||
| Useful life | 4 years | 5 years | ||
| Estimated residual value | $0 | $0 | ||
| Estimated total income over the useful life | $6,720 | $27,600 | ||
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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