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Table 1.2 1 4 5 6 Average 2 3 Investment A 400 300 500 200 100 - 300 After tax benefits Value of Investment Jan 1 Dec 31 Aver
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Answer #1

Investment A : Average rate of return =Average Returns/Average investment= 300/500 = 0.6

Investment B: Average rate of return =Average Returns/Average investment= 350/500 = 0.7

Higher rate of return is in Investment B, hence Investment should be made in B.

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