Question

need help with how to get average rate of return

14% 3.4331 62000- 3, T6 200 less %31 Problem 20) Trevoline Company is deciding between two projects. Each project requires an initial investment of $350,000 with a 3 year useful life and $100,000 salvage value. The projected net cash flows for the two projects are listed below. The revenue is to be received at the end of each year. Trevoline reguires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity factors for 10% are presented below. Calculate net present value, average rate of return, and payback period. Project B Cash Flows $160,000 $175,000 $175,000 Present Value of an Project A Cash Flows $50,000 $200,000 $250,000 Present Value Annuity of 1 at 10% 0.9091 1.7355 2.4869 of 1 at 10% 0.9091 Periods 0.8264 0.7513 Project B Net Income Project A Net Income $20,000 $70,000 $90,000 Periods $40,000 $50,000 $42,000 pv 45455 145 45E 14462 165 280 131,4 187285 42 398,560 35 350, cau NAY 48560

Answer 1

357-009 WEEK 52 22 Monday Calculation of ARR. ARR = Average Puglit after tap & depreciation Net initial Investment. 10 Projet A 7 Averape profit = 20000 + 70000 790000 = $60000 Initial inueshment = $350.000 ARR = 60000 = 17.14% 350000 Project B7 Average prolet - 40000+ 50000 +42000 = $ 44000 - ARRE ARR = 44000 = 12.57% 350.000 Since in the Question it is mentioned to provide computation os of ARR only, I have provided the same. 3 04 Evening CS Scanned with +EamScanner