Chapter 12 Homework Question 1

Average Rate of Return The following data are accumulated by Watershed Inc. in evaluating two competing capital investment proposals: Project A Project 2 Amount of investment $48,000 $36,000 Useful life 4 years 7 years Estimated residual value 0 Estimated total income over the useful life $4,320 $10,710 Determine the expected average rate of return for each project. Round your answers to one decimal place. 0 Project A % Project 2 %