Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an...

 

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Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Operating Income 1 2 3 4 $75,000 100,000 109,000 36,000 $320,000 Net Cash Flow $285,000 290,000 190,000 125,000 $890,000 The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the average rate of return on investment. Round your answer to one decimal place. % Dickerson Co. is evaluating a project requiring a capital expenditure of $810,000. The project has an estimated life of 4 years and no salvage value. The estimated net income and net cash flow from the project are as follows: Year Operating Income 1 2 3 4 $75,000 100,000 109,000 36,000 $320,000 Net Cash Flow $285,000 290,000 190,000 125,000 $890,000 The company's minimum desired rate of return is 12%. The present value of $1 at compound interest of 12% for 1, 2, 3, and 4 years is 0.893, 0.797, 0.712, and 0.636, respectively. Determine the average rate of return on investment. Round your answer to one decimal place. %

Answer rating: 100% (QA)

SOLUTION To calculate the average rate of return on investment we need to first calculate the total ... View the full answer