Payback Period and Accounting Rate of Return: Equal Annual Operating Cash Flows without Disinvestment

Juliana is considering an investment proposal with the following cash flows:

Initial investment-depreciable assets - $40,000

Net cash inflows from operations (per year for 10 years) - $5,000

Disinvestment - $0

For parts b. and c., round answers tothree decimal places, if applicable.

a. Determine the payback period.

Answer: 8 years (correct)

b. Determine the accounting rate of return on initial investment.

Answer: 0.025 (correct)

c. Determine the accounting rate of return on average investment.

Answer: ?