A) Average Rate of Return The following data are accumulated by Lone Peak Inc....
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Accounting
A)
Average Rate of Return
The following data are accumulated by Lone Peak Inc. in evaluating two competing capital investment proposals:
3D Printer
Truck
Amount of investment
$96,000
$40,000
Useful life
4 years
7 years
Estimated residual value
0
0
Estimated total income over the useful life
$8,640
$12,600
Determine the expected average rate of return for each proposal. If required, round your answers to one decimal place.
3D Printer
fill in the blank 1 %
Truck
fill in the blank 2 %
B)
Cash payback period for a Service Company
Omni Financial Inc. is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $150,000 and each with an 8-year life and expected total net cash flows of $240,000. Location 1 is expected to provide equal annual net cash flows of $30,000, and Location 2 is expected to have the following unequal annual net cash flows:
Year 1
$59,000
Year 5
$31,000
Year 2
44,000
Year 6
25,000
Year 3
29,000
Year 7
18,000
Year 4
18,000
Year 8
16,000
Determine the cash payback period for both location proposals.
Location 1
12345678
years
Location 2
12345678
years
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