Question: E15-1. Average Rate of Return Obj. 2 The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals: Testing Equipment

E15-1. Average Rate of Return Obj. 2 The following data are accumulated

E15-1. Average Rate of Return Obj. 2 The following data are accumulated by GreenApple Motors Inc. evaluating two competing capital investment proposals: Testing Equipment Diagnostic Software Amount of investment Useful life Estimated residual value $150,000 $75,000 8 years 5 years $20,000 $2,500 Estimated total income over the useful life $122,400 $42,625 Determine the expected average rate of return for each proposal. ANSWER Check Figure: Testing equipment, 18%

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