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Score: ALT-AVERAGE-RR 0 Choose Exercise: (1-5) 1 9 10 11 12 13 14 Vonn Oil Company invests $600,000 in a project that will yield net
Score: ALT-AVERAGE-RR 0 Choose Exercise: (1-5) 1 9 10 11 12 13 14 Vonn Oil Company invests $600,000 in a project that will yield net income over a 4 year period of $320,000. The salvage value of the equipment is expected to be $40,000.00. What is the average rate of return on this project? Hint: The average rate of return is equal to the Average Annual Income divided by the Average Investment. 15 16 a. Calculate the Average Annual Income Total Income/Number of Years 17 18 b. Calculate the Average Investment (Cost of Investment + Salvage Value)/2 19 20 c. Divide the Average Annual Income by the Average Investment (a/b) 21 22 23 24 25 26 27 28 29 30 31 32 0 0 M
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