Average Rate of Return Determine the average rate of return for a project that is estimated...

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Average Rate of Return Determine the average rate of return for a project that is estimated to yield total income of $177,660 Cash Payback Period A project has estimated annual net cash flows of $22,000. It is estimated to cost $70,400. Determine the

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Answer 1

Answer #1

Average Rate of Return

Average Rate of Return = Average income / Average investment

Average income = 177,660 /3 = 59,220

average investment = (Cost +Residula Value )/ 2 =(490,700+73300)/2 =282,000

Average rate of Retunr = 59,220 /282,000 = 21% ( Answer)

Cash Payback Period

Cash Payback Period = Investment / Cashflows = 70,400 / 22000= 3.2 Years (Answer)

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Answer 2

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