Reference no: EM132537481

June Co. is evaluating a project requiring a capital expenditure of $620,000. The project has an estimated life of four years and no salvage value. The estimated net income and net cash flow from the project are as follows:

Year         Net Income          Net Cash Flow

1                $45,000                $200,000

2                 85,000                  240,000

3                    5,000                   160,000

4                  15,000                    170,000

                        $150,000           $770,000

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.

Question a. Determine the average rate of return on investment, giving effect to depreciation on the investment. Round your answers to two decimal places.

Question b. Determine the net present value.