Average 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	$300,000	$150,000
Useful life	8 years	5 years
Estimated residual value	$40,000	$5,000
Estimated total income over the useful life	$244,800	$85,250

Determine the expected average rate of return for each proposal.

Testing Equipment	__________%
Diagnostic Software	__________%