What are the Average Annual Rates of Return of each investment? Remember on Jan 1 of Year 1, the value of the investment is the initial cost. You must remove annual depreciation to get the value on Dec 31. Jan 1 of Year 2 is the same as the value on Dec 31 of the year prior and so on. Round to the nearest dollar for the table and nearest tenth for the percentage.

Investment A has lifespan of 10 years and an initial cost of $100,000

Investment B has a lifespan of 8 years and an iinitial costs of $50,000

TOMs Tomatoes and Herbs, LLC assumes an 8 percent discount rate on potential investments.

Investment A						Investment B
	After-Tax Benefits	Value Jan 1	Value Dec 31	Average Annual Value			After-Tax Benefits	Value Jan 1	Value Dec 31	Average Annual Value
Year 1	$5,000	$100,000				Year 1	$20,000	$50,000
Year 2	$5,000					Year 2	$10,000
Year 3	$5,000					Year 3	$10,000
Year 4	$10,000					Year 4	$5,000
Year 5	$15,000					Year 5	$5,000
Year 6	$30,000					Year 6	$2,500
Year 7	$60,000					Year 7	$2,500
Year 8	$30,000					Year 8	$1,250
Year 9	$10,000					Average
Year 10	$5,000					Average Annual Rate of Return:
Average:						Which investment would TOMs choose?
Average Annual Rate of Return:

5) What is the Equivalent Annual Cost of each investment to TOMs Tomatoes and Herbs, LLC?

Investment A:

Investment B: